Blockchain technology is becoming widely adopted across multiple industries in the private sector and government. While many people may not know what blockchain technology is. There are significant implications for anyone who works in law enforcement or public safety.
Understanding Blockchain Technology
So, what is blockchain exactly? In broad terms, a blockchain is a ledger that has a record of transactions made in Bitcoin or other cryptocurrencies. Recorded chronologically and available publicly. It was first developed as the underlying infrastructure that allowed Bitcoin to be traded anonymously online without an intermediary; it was needed because all transactions occurred between pseudonymous users (e.g., persons known only by their cryptographic address). All Bitcoins exchanges were permanently recorded on the decentralized ledger, creating an audit trail from which no one could hide.
A blockchain is essentially a shared ledger that contains the history of every bitcoin transaction ever made. This does not mean, however, that blockchain technology is limited to Bitcoin. Because of its design, it could be applied to various uses in which transparency and permanence are important. From information about shipments or digital assets like intellectual property to medical records and government documents.
Blockchain technology has been called “a foundation for truth”. Because it offers an unalterable record of who owns what at any given moment in history. Blockchain technology uses a distributed ledger to replace the need for a third-party transaction mediator(such as PayPal or your bank). It removes the need for trusted third parties (such as financial institutions) by establishing the integrity of transactions. Through transparency and cryptography; subsequently, they serve only as additional support rather than necessary infrastructure for trustless systems such as Bitcoin.
In essence, blockchain works like an accounting ledger that records all transactions chronologically and publicly as per RemoteDBA.com. You could think of it as replacing the function typically provided by stock exchanges, notaries, central securities depositories. (CSDs), payment processors. And other financial intermediaries with automation and disintermediation on a peer-to-peer basis. But only if they use cryptography rather than rely on trust to ensure transparency and immutability.
Blockchain: The New Technology of Trust
One way to explain blockchain is that it is a new technology of trust. If one only relied on one’s records without the ability to confirm with legal certainty what someone else. May have in their records, a lot of mistakes would be made, especially in cross-border matters (e.g., trade finance). Or cases where there is little documentation (e.g., land titles).
More precisely, the blockchain works like this: multiple copies of the ledger are distributed across nodes rather than being held by a central authority; every transaction must first be confirmed and validated through consensus among the various members of each participating node; once it has been verified as accurate, a block containing said transaction enters into the ledger chronologically; parties can always refer back to transactions because they remain part of an uneditable, immutable public record.
All transactions are transparent and visible to any participating computer (or node) within the network. In this way, it works like a massive virtual spreadsheet that everyone in the world can securely access. Read and write entries into; unlike today’s internet, where information is siloed in isolated servers disconnected from one another, making it easy for hackers to steal or alter data without anyone knowing since there is no single authority with full visibility into what is taking place.
What Blockchain Means for Trade & Finance
We are already seeing blockchain technology play an increasing role in trade finance and other types of applications. Such as recording land titles through its ability to securely store permanent records. Anywhere at any time by authorized individuals in a way that cannot be hacked by cybercriminals. Blockchain technology could also manage physical assets such as machinery or even store patient records in the healthcare industry.
Blockchain technology is perhaps most well-known for its use in Bitcoin, so it has come to be known as “distributed ledger” technology. The idea was to mimic some of the same economics behind Bitcoin and apply it to information exchange and digital transactions without needing any central authorities or intermediaries; rather than having your identity held hostage by banks and credit card companies or being governed by governments through Know-Your-Customer (KYC) and Anti Money Laundering (AML) regulations, users would instead control their data via cryptography working on the basis that the majority of it is good and thus honest.
Blockchain technology could potentially be used to represent virtually everything of value, not just currencies, stocks, bonds, or commodities but also physical assets such as real estate, paintings, etc. It can prove beyond a shadow of a doubt what was originally agreed upon in a contract between two parties when the time comes for one party to prove legal ownership of the said asset(s) without being at risk of having someone forge their signature, which would make them legally liable even if they were unaware that someone else had fraudulently signed on their behalf.
What Blockchain Technology Cannot Do Yet
One problem with blockchain is that all transactions are anonymous, so there is no way for third parties to know if someone is using blockchain technology for legal or illegal purposes. It would be possible to have a public registry of all transactions within the network with some form of tax ID so that users are accountable for their actions. Still, this aspect has yet to be fully ironed out because there are concerns about privacy and anonymity in general, so it might take time before this type of technology can see widespread use.
Blockchain will also not solve the issue of market volatility as many people seem to think; just because assets can now be securely stored and transacted on the blockchain doesn’t mean they will necessarily maintain or increase in value over time- “storing” Bitcoin, for example, does one no good if its value drops by half in as little as three years.
Blockchain technology is still in its infancy right now, and there are plenty of kinks that need to be worked out before it becomes mainstream; many people also tend to forget or don’t care about all the benefits blockchain brings with it, such as decentralization, autonomy, immutability, and security since they want instant gratification right away instead of having patience for things they deem unnecessary.