The blockchain has become known through cryptocurrencies such as Bitcoin. But it is also gaining importance in other sectors of the economy, such as logistics or IT auditing.
The technology of the blockchain
The blockchain works with encrypted data that is chronologically chained together: A block is appended to an original data record, then another block, and on and on. The result is a history of data records that map financial transactions, for example.
The special feature of the blockchain is that all participants in the system have a copy of the entire database. This is referred to as a distributed ledger. If a new block - a new "link in the chain" - is now added, the blockchain on each participant's computer is updated accordingly.
This leads to a high level of tamper-resistance: if a single copy of the data chain is tampered with, numerous correct copies still exist in the system. The manipulated data record is then simply sorted out. In addition, the sequence of the blocks is secured by a checksum.
The benefits of the blockchain
As mentioned, the blockchain forms the basis for so-called cryptocurrencies such as Bitcoin or Ethereum. The great advantage of these payment methods is that financial transactions can be processed directly and securely between two parties: The new technology provides both parties with reliable proof of whether a payment has arrived, for example. An intermediary such as a bank is therefore no longer necessary.
More recently, NFTs have been added as a variant: Non-fungible tokens are digital "tokens" in which a specific asset is stored - for example, a digital work of art or the forgery-proof scan of a property deed. These tokens are encrypted using blockchain technology so that no one can illegally copy them. Unlike cryptocurrencies, each NFT has its own value and is therefore unique worldwide.
In logistics, the blockchain offers the possibility of seamlessly documenting the entire path of a piece of goods from production to the retailer in a tamper-proof manner, without the need for an intermediary entity.
The blockchain can also be used to document safety-critical operations of software. In this way, highly sensitive data can be protected from manipulation. Examples of applications include electronic health records, contracts, military secrets or digital voting in elections.