WTF is blockchain?

Surprisingly blockchain has a lot to do with transactions, entries, and ledgers. As an accountant and a finance guy, I admire the concepts underlining blockchain technology. Back in the days, when I was an auditor our major product was trust in the marketplace. We were selling audit reports that were building trust between two parties entering into transaction or agreement.

Most of the audit work is about verifying the ledgers of entries by gathering evidence that information is complete and accurate. Why? Because people operating the ledgers can alter information on purpose or make mistakes. Now imagine that you have ledgers that cannot be messed up. Ledgers built on blockchain technology cannot be hacked and changed. Do you understand how revolutionary is the idea? It is like a new era.

Let say you want to buy something of high value, an expensive watch, a piece of art, or an expensive car. In all these transactions you need to prove the integrity of an item that you are buying. Blockchain can provide you a single source of trust that information you provided is permanent, verifiable and unchangeable.

Let’s discuss the definition of blockchain. A blockchain is a constantly growing ledger that keeps a permanent record of all the transactions that have taken place, in a secure chronological and immutable way.

For example, Bitcoin has a public blockchain ledger that supports it. The ledger of bitcoin is constantly growing, it is over 200 gigabytes now. You can see every single transaction that took place in the ledger. The first entry on bitcoin ledger matched the cover of The Times for the 3rd January 2009 and says: “Chancellor on brink of second bailout for banks”. Entry was made by mysterious Satoshi Nakamoto.

This data is secure because there are thousands of copies of this data are distributed on computers all around the words and they are also encrypted. Every block (entry) that is added to the blockchain is connected to the previous one in chronological order and immutable. Nobody can change it once it is recorded.

That means once you have a ledger that cannot be changed, you have trust and integrity between parties entering the transaction and that is a big game-changer. You can see now how this technology can be applied in any activity of life that requires integrity. Once allocated to its maximum its will be studied as a revolution in human history.