The latest buzzword in technology - Blockchain! But if you think that Blockchain is something that your technicians use when changing engines or think it's some kids game like Roblox, think again! We're here to help you understand what Blockchain is, what it means, and how Blockchain technology works.
Fundamentally, a blockchain is effectively just a database that stores information. However, blockchain has the ability to store information with unique attributes.
Blockchain technology offers the following features:
Decentralization
No single party has control over what goes into the blockchain. Arguably the most important feature of blockchain is this decentralization. Copies of the blockchain ledgers are stored and updated on computers all over the world. This means that no central authority can make decisions.
Consensus
Because so many different parties store the exact same copies of the blockchain ledger, the majority has to agree on what is being added to the blockchain.
'Add Only'
This means that existing information cannot be edited and changed. Only new information can be added. And new information cannot conflict with what has already been added.
A relatively easy way to explain how a blockchain works in practice is to look at the most well-known application of blockchain, a Bitcoin transaction. However, remember that Bitcoin is to blockchain what e-mail is to the Internet, an application based on infrastructure.
So if I want to send 1 Bitcoin to you, everyone on the Bitcoin ledger can see that I have 1 Bitcoin and you have none. I can send you 1 Bitcoin, and the network will see this and update every ledger. But in theory, I could change my copy of the ledger to show that I have 2 Bitcoins. But with blockchain technology, this is impossible. Why?
Blockchain Security
The information stored on a blockchain is stored in groups, called blocks. Each block is time-stamped and linked to the previous block, creating a linear chain of blocks, hence blockchain.
Each of the above blocks contains 3 types of information.
- Transactions data
- The block's hash
- The previous block's hash
The hash is effectively the block's fingerprint – a unique string of numbers that identifies each block. These numbers are automatically calculated based on the information stored within the block.
If the block's stored information is changed, then by default, you change the hash of the block and thus its identity.
The hash of the previous block sits in each block, which is what creates the chain of blocks. This is what makes cryptocurrency so secure.
Each block contains the 3 elements listed above, but see below what happens when the information is tampered with in block 2.
Block 3 contains the hash of block 2, but when block 2 is changed, so does its hash, meaning that everything in block 3 and beyond becomes invalid, breaking the chain.
It would then be essential to recalculate the hashes of every block that has changed. But that is just the start. The Bitcoin network makes it intentionally difficult to find these hashes.
On average, and in the most simplistic of terms, the hash for a block is found every 10 minutes by computers constantly guessing random numbers and seeing if they fit.
This process is known as proof of work and is carried out by powerful computers. This is 'Bitcoin mining'.
So for every block manipulated, 10 minutes of intense computing work to mine each block would be required. And that's just the local copy!
As the Bitcoin ledger exists over tens of thousands of computers globally, it would be required to access over 50% of the world's computers. Insanely expensive and virtually impossible. Hence the reason blockchain technology is considered to be so secure.
Applications of Blockchain
While in its infancy, many experts consider that blockchain technology will radically change many industry sectors. Banking is the most obvious, negating the requirement for middlemen such as banks. Think also of voting rights and supply chain systems where access to the current status and stock levels is immediate and indisputable.
For the car dealer, there are multiple potential applications of blockchain. Accepting cryptocurrency as a means of payment for vehicle deposits, monthly payments, and outright purchase is one.
Also, think of the benefits of the life history and specifications of vehicles stored on the blockchain. That 60-year-old Jaguar E-Type with a full-service history, repair records, parts, and maintenance is stored forever digitally.
Blockchain technology provides a transparent and secure way to track and verify information. It has the potential to revolutionize various industries by reducing the need for intermediaries, enhancing security, and ensuring trust in transactions.
As blockchain continues to evolve, its applications are expanding beyond cryptocurrencies like Bitcoin. Industries such as finance, supply chain management, healthcare, and even government sectors are exploring the potential of blockchain technology.
In conclusion, blockchain offers decentralization, consensus, and immutability, making it a powerful tool for storing and verifying information securely. As businesses and industries recognize the benefits of blockchain, we can expect to see its widespread adoption and transformative impact in the near future. AutoCoinCars is at the forefront of innovation for blockchain technology with our crypto payments, enabling users to buy a car with cryptocurrency. We look forward to seeing the continual updates and improvements in and around Blockchain technology.