Is Blockchain the Future of Internet Security?
The collapse of the housing market in 2008 resulted in growing skepticism towards the United States’ financial markets and institutions. As a result, Bitcoin, a cryptocurrency, was first introduced using blockchain technology or an “incorruptible digital ledger.”
Bitcoin’s purpose was to remove the middleman, enabling consumers to make electronic payments without having to go through financial intermediaries. Simply put, Bitcoin is the digital equivalent of paying for something in cash. It’s completely anonymous and only between you and another party.
Cryptocurrencies, such as Bitcoin, were built using the revolutionary creation of “the blockchain.”
Blockchains work a lot like Google Docs. Instead of having to send a Word document between two people, Google Docs enables both parties to collaborate on one document at the same time. Similarly, instead of using a financial intermediary to transfer funds, blockchains create a shared ledger that can be accessed by both parties at the same time. This makes financial transactions seamless and protected, while at the same time incredibly accessible.
By cutting out the middleman, companies can save a substantial amount of money in transaction costs while maintaining a more secure way to transfer funds and documents.
Needless to say, blockchains have the potential to change the way we view and value digital information. Some even go so far as to say that blockchains will pave the way for an entirely new internet.
Adding Value through Decentralization
With blockchains, there is no central point that governs over the network. Instead, each computer on the network acts in the same capacity and jointly manages the entire network as one unit. The control comes from the network itself rather than a central authority.
As of right now, blockchain networks are used to manage and record Bitcoin transactions. However, blockchains could also be used to store and transfer data, documents or media. According to author, William Mougayar, “Online identity and reputation will be decentralized. We will own the data that belongs to us.”
Improving Overall Security
Data stored in the blockchain is not kept in one single location. Instead, it is distributed amongst every single computer that is on the network. This is a monumental step in improving cybersecurity. Currently, hackers are able to obtain data through a single entry point because the data is stored in one place. Since a blockchain network distributes this data on a vast amount of computers, a hacker would have to infiltrate every single one of the computers on the network to corrupt and destroy any files.
This is not to say that the blockchain is impenetrable. However, the probability that a hacker possesses the computing power to take down each individual computer is very small. Even though blockchains are relatively new, this technology is beginning to be applied to a variety of sectors due to its massive cybersecurity potential.
Increased Efficiency and Storage
Without the need for third party intermediaries, blockchains speed up transaction processes and effectively lower costs. The increased speed of financial transactions through blockchain’s peer-to-peer model has also begun to bleed into the energy sector. Without financial intermediaries the process of purchasing energy has gotten easier, quicker and cheaper. As a result, in Europe, blockchains have led to a “systematically more efficient, flexible and decentralized energy system.”
Going beyond efficiency, blockchains have also vastly improved our data storage capabilities. Since the network runs on individual computers, the data is spread out onto each of them, increasing storage capacity and lowering costs. These computers or “nodes” are incentivized for sharing their bandwidth through cryptocurrency payments, making it a win-win for both the people who need the storage and those who are willing to offer it.
The potential of blockchains are truly incredible. Though it is new, it is considered a “foundational technology” instead of “disruptive,” meaning that from this point we are able to build bigger and better things upon it. This tech might even plunge us into a new era of digital information. Who knows what could be next?