For thousands of years, society has recorded information in ledgers, ranging from clay tablets, books through to cloud based computer systems. Despite the advance of technology, all of these ledgers have effectively been siloed with access (or “permission”) to write and read information generally being restricted.
Blockchain is a new technology that flips the traditional model of a ledger upside down. Rather than have multiple separate silos, a blockchain (in its purest form) can act as a unified database that’s accessible (on a read and write basis) by everyone (it is in effect “permissionless”). The ledger stored on a blockchain is shared amongst a distributed network of computers. The use of cryptography enables users to modify the master ledger without the need for a central authority.
It is the distributed nature of the ledger that is such a powerful idea and which causes some to think that the blockchain will be as revolutionary as the internet. As noted above, with a blockchain there is no need for a central trusted authority or for intermediaries. The disintermediation of intermediaries could redefine the value chain in a wide range of industries, from financial services to media, and puts the power and value of data back in the hands of the people creating that data. Blockchains can be public (such as the Bitcoin blockchain or the Ethereum blockchain) – these are effectively permissionless, or they can be private (where access is restricted to a selected group of users).
Other arguments in favour of the use of blockchains has been the argument that they are immutable (i.e. cannot be altered) and the distributed nature of the network means that it is practically impossible to hack. However, as we will see this is not necessarily the case.
Click here to read the full article, as published in our Global media and Communications Quarterly.