Blockchain Technology: What is it? And How it Actually Combats Fraud! (psst: BBB likes this)

July 27, 2017

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” - Don & Alex Tapscott, authors Blockchain Revolution (2016)

As an organization that has for years been raising awareness about online fraud and cyber hacking, blockchain technology could be the holy grail the online world needs when it comes to protecting personal and financial information. It sounds nifty...but what is it?

Here’s the rub...explaining blockchain technology isn’t that easy, at least in layman’s terms, but it could very well be a game changer in tech. Blockchains are often described as the next level of the Internet. At its heart, it’s a hyper-public digital ledger where duplicate information is ‘shared,’ much like a Google Doc, throughout a network of ‘nodes’ or computer terminals. Each financial transaction is linked to the previous one, time-stamped and unalterable. This technology was first brought to light to facilitate transactions of the online currency Bitcoin. The idea was that people could make transactions with each other without the interference or need of governments or banks to help build that pesky thing called trust. Yet there is more trust in a blockchain. Wait, what? You heard me!

The problem with big banks is they use centralized servers chock full of personal information which can be, you guessed it, hacked or altered. With a blockchain network, hundreds (if not more) computers would need to be hacked simultaneously in order to steal digital currency or change something of value like a name on a land title. The power and logistics required to make that happen makes it pointless to try. With the nodes in place, changes or additions to any ‘ledger’ need to be done with the consensus of those within the network. Because blockchains are, at their heart, public, the benefit is that it increases transparency among financial transactions. Not one person or organization holds ownership of the chain. This makes it tamper and fraud resistant. Any ‘hack,’ however remote, would be picked up right away.

The Internet was fundamentally designed to upload, store and share information, but nothing that actually constituted any value at the digital level. That’s where this technology is headed. Think literal digital money. As well, blockchains have the power to cut time and costs at almost every level by eliminating the middleman - think banks, accountants, lawyers - time-consuming and expensive. Experts feel blockchains may revolutionize business and economies like the Internet has done for communication. And at the same time, it builds more trust among peer to peer transactions. And like I said...BBB likes that.