Perhaps at this era where angel investor, online businesses, and valuation are the dreams for most young entrepreneurs, the term Blockchain is the buzzword in technology and definitely one of the most intriguing vocabularies for investors. The author itself attended an event with an angel investor and a VC as speakers. They both confirmed that, yes a business proposal with the word ‘blockchain’ on it has higher chances to survive in their desks because they believe that anything with Blockchain is most likely to be versatile and still has a lot of development potentials in the future.
Yet, for the general public, although the majority has have heard of the term, most does not really understand what the term really meant. For sure, we all know that around 2-4 years ago Bloomberg announces to the world that they are using Blockchain. Then we all realise that when anyone mentions blockchain, it most likely has something to do with Bitcoin and all the current booming time-sharing online businesses. Starting from ride sharing, to house sharing, to even online shopping. However what exactly is Blockchain? How does it relate to the aforementioned businesses? How is it different from any existing systems before it? What causes the hype?
To answer said questions and also satiate the impending curiosity, the author did a little research on the term and managed to summarize the readings. The system itself was created by a mysterious and unknown entity by the name of Satoshi Nakamura at 2008. Until today, the identity of the system creator is still a mystery. It is said that Blockchain was specifically created to support the world’s first crypto currency, Bitcoin. Bitcoin itself is a digital currency that emits the function of a middle party commonly found in the current financial system of Banks and instead, engages user and provider directly. Hence, a secured and large information flow platform is a necessity.
In the words of a rather tech inept person, the author sees Blockchain as a system where a large amount of information is accessible at many platforms at the same time by various users. In other words, the data provided by this Blockchain system is supposedly transparent and available for the public. It eliminates the centralised system and opts for a decentralised one where no certain party or entity is able to control the information.
Yet, if there is no certain single entity that is able to control the information, then how does new information reaches the Blockchain system? Through the author's understanding, Blockchain works like a diplomacy system where the majority votes wins. For instance, many users inputs new information regarding currency exchange policy. Blockchain system will automatically archive the master or original information posted regarding currency exchange policy and encrypt it with cryptograph. The encryption is done to prevent, individuals or entity to misuse the system and edit the original information. Next, the system will then select the most popular entry as the ‘final’ or ‘official’ information to be shared on the system.
The question still remains, how does Blockchain security system able to withstand the probable onslaught by hackers when the information travels to million platform all at once and has no centralised system to regulate it? The answer is through encryption. With encryption, each user has both public key and private key. A public key is a string of numbers, like an IP address of a device but for a user. The private key is like the ‘password’ that gives access to the user to their personal account, and is using mathematical proof to secure it. As is with the common hacking cases, usually information is stored in a centralised point and is secured by a username/password system that is easier for hackers to get into. To make it easier to imagine, think of bitcoin users. Each users has their own accounts which needed a private key to access, whilst surfing the system they need to have a 'address' which leaves trail marks. Said address is the public key.
Nonetheless, with all the high-tech and incredible utilisation of the system, it also has its limits. Remembering that the system has only been introduced to the public for 10 years, there are still loop holes where the system is not yet suitable to be applied. There are still institutions or businesses that needs centralised system to control information flow. These companies mostly deal with secretive or sensitive private information that is not to be shared to the public. For instance, hospitals with their medical records, government intelligence institutions, banks and many more. However, with the rapid growth of technology and innovations, perhaps Blockchain will be able to cater to the institutions. In short, understanding the basic idea of Blockchain is not difficult, but defining the ever developing system itself posts as a challenge.
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