Why it matters
At present, blockchain and other distributed ledger technologies are drawing the attention of researchers due to their potential cross-sectorial applications beyond finance where it emerged.
Because of the expected impact on the financial sector, banks are serious in further exploring this technology. Blockchain was born as the underlying protocol to sustain the Bitcoin ‘virtual currency’ by incorporating a data security layer and providing user trust and confidence about digital transactions.
A blockchain is all about organizing and storing information in accordance with a predefined logic. Instead of data being accounted and stored on a central server’s database, it’s encrypted, and a copy is stored on every node connected to the network. This disruptive technology is recognised as a possible revolution of the way the Internet functions and opens infinite possibilities. Blockchain is based on distributed databases that are shared among peers. It can thus be seen as a huge file which stores data in a logical, historical, secure, and immutable way.
This peer-to-peer system stores and shares a digital ledger of data using cryptography to ensure confidentiality and integrity. As a result, blockchain networks not only reduce the probability of compromise but also impose significantly greater costs on an adversary to do so. The importance of this technology is the creation of trust in digital data because a large decentralised network is able to attest the validity of data and it holds a permanent secure digital record. Other possible applications come in the implementation of smart contracts on the blockchain, identity protection or data protection. However, the benefits and real applications in the fields of communications and countering cyber threats will likely not be seen until 2025 at the earliest.