What is blockchain? A guide for getting started with blockchain in your app

Over the last few years, most of us have heard about a new technology known as blockchain. Usually, we hear this new word thrown around with Bitcoin and cryptocurrency, but even crypto investors tend to have a limited understanding of what blockchain is. 

This guide will go through the ins and outs of blockchain, answering questions like how many blockchains are there, the benefits of blockchain, and how blockchain can be applied. 

What is blockchain?

Blockchain is a type of decentralized database that stores data in blocks chronologically. Each block is chained together using unique fingerprint-like identifiers called hashes. The database is hosted on a decentralized computer network that constantly runs checks to ensure the data agrees across all copies of the database.

There’s a lot in that definition to break down, so let’s take a look at each part with an example. For instance, say you were writing a paper. Every few minutes, you save that paper to avoid losing any data. A blockchain would allow you to see each version of that paper you created every time you saved it. 

These versions would be called “blocks” in the blockchain. Each block is a chronological variation of the initial version. The system verifies each block to ensure that the blocks match on every computer hosting the database. These verifications check to make sure blocks haven’t been tampered with or corrupted by an error. This is kind of like backing up your phone data to the cloud, only more secure.

That’s just one underlying aspect of a blockchain, though. Blockchains are also decentralized. So you could have multiple people working on the same document. Whenever someone saves that document, the system creates a new block in the blockchain with that version, and everyone plugged into the blockchain can see that new version. Additionally, everyone can see every past version (or past blocks) of that document. 

Of course, there’s no reason why everyone would have to be working on the same document to share a blockchain. For instance, a school could use a blockchain to keep track of every student’s essays for all time. Every time someone saves an assignment, the system creates a new block. So there are hundreds of versions of hundreds of documents, all stored in chronological order. 

This system could nearly eradicate plagiarism among students. If every version of every essay written by every student at a school is stored and secured chronologically, and every student and staff member can view this blockchain, then it would be impossible to copy another student’s work without being caught. It would also be impossible to lose the student work, keeping the record of that work safe.

What are the benefits of using blockchain?

True chronological record keeping

The primary benefit of using blockchain is, of course, also its primary function. Blockchain is an excellent way to store records chronologically. And since it’s so versatile, you can use it for virtually any kind of record-keeping. 

Software people who have worked with Git can likely see the similarities between Git and blockchain. Blockchain is so powerful because it applies the underlying principle of a version control system to nearly any kind of information — plagiarism protection, financial transactions, law-keeping, medical record storage, financial investments and so on. 

Blockchain is incredibly secure

Blockchain is also incredibly secure. It’s hard to overstate this. The fingerprint-like hashes that link each new block to the previous block in the chain create nearly unbreakable security. They can’t be separated or shifted around, which makes fraud and tampering almost impossible. 

Consensus reinforces blockchain’s security. Since a network of computers shares a blockchain and updates every record when adding each new block, it’s impossible to edit, add to, or otherwise alter the blockchain without others seeing those changes. 

Likewise, each change has to be “verified” by every other user of that blockchain. This means that each person’s copy of the blockchain must check and validate that blocks added by different users are legitimate. So nobody can falsely add new blocks.

It’s a decentralized way to store records

Lastly, blockchain was initially conceived to be decentralized. Like cryptocurrency (or even the internet), blockchain technology often exists outside of centralized moderation. When a blockchain is decentralized, it can’t be controlled or tampered with by governing bodies or corporate interests. 

Not only does this aid in building trust in blockchain record-keeping, but it also makes blockchain more accessible to everyone. Everyone using a blockchain also has their own copy of that blockchain, democratizing its use and keeping everything secure. 

How many blockchains are there?

In short, there are a lot of blockchains. People create new types of blockchains every day. It’s a flexible technology term, like SaaS, and you can apply it in just as many ways. 

There are four main types of blockchain, though. And most of today’s blockchains can be categorized under these types.

1. Public

The first and most common type of blockchain today is the public blockchain. These are blockchains that anyone can access and use. Most cryptocurrencies use public blockchains. 

Public blockchains are fully decentralized and immutable, so anyone in the world can access them without disrupting them. These blockchains are anonymous, too, so everyone can see the activity on the blockchain without knowing whose activity they’re viewing. This transparency makes blockchain perfect for cryptocurrency —  the transactions are publicly visible without giving away personal information.

2. Private

A private blockchain is one in which a single organization or individual has total control over the blockchain. You can think of this as a “proprietary” blockchain. A school, business, government agency, or even a person could control a private blockchain. 

Since a limited group of people uses this blockchain, it can run faster than a public blockchain. It also has the benefit of being more private and scalable. 

3. Hybrid

Hybrid blockchains are, as the name implies, combinations of public and private blockchains. They pull elements of each together in unique ways, keeping things confidential and proprietary without closing out the rest of the world.

For example, the real estate industry could use a hybrid blockchain to keep track of house sales. Only real estate businesses would have access to the blockchain, but it wouldn’t be limited to any specific real estate business, either. 

4. Consortium/Federated

Similar to a hybrid blockchain, federated or consortium blockchains combine elements of private and public blockchains. Federated blockchains keep certain features just for enterprise and share other elements with the public. 

For instance, a bank wouldn’t want to use a blockchain that is publicly available and usable. However, a bank would like customers to use a blockchain when making purchases and ATM transactions. So at certain times, the public can use the blockchain, while the bank exclusively manages the blockchain under different use cases. 

Notable and potential uses for blockchain technology

Throughout this guide, we’ve touched on a few use cases for blockchain technology. Real-world applications are nearly always the best way to understand how and why a piece of tech works. So let’s look at a mix of theoretical and real-world uses for blockchain. 

Bitcoin and cryptocurrency transactions

Kicking this list off is the use case that we’re all familiar with, Bitcoin and cryptocurrency transactions. 

Bitcoin relies on public blockchains, allowing everyone making Bitcoin transactions to ensure that the transaction is valid. There’s no need for government oversight, corporate or banking validation, etc. As long as two individuals have a medium for making transactions, they can and know that it’s valid. 

Verifying elections

An interesting application for blockchain is election verification. Though most elections still rely on traditional voting methods, blockchain voting is appearing more frequently, including in the 2020 presidential election in Utah County. 

In this use case, governments use a blockchain to keep track of each person’s vote. Blockchain voting has the potential to prevent issues like double-voting, lost ballots, voting by illegitimate individuals (e.g., deceased individuals), and so on. 

While voting systems could use private or hybrid blockchain systems, a federated blockchain would likely be the ideal solution. It would allow for the blockchain to be overseen and controlled by a governing body while also allowing individuals to interact with it when casting their votes. 

Managing medical records

An excellent possibility for private blockchain is in the healthcare sector. Specifically, hospitals could use a private or hybrid blockchain to keep track of every patient’s medical records. 

This would allow doctors to easily and quickly share medical data with hospitals all across your healthcare network. It would also provide doctors with an accurate and reliable medical history, allowing for more precise and prompt treatment. 

Filing taxes securely

On a federal level, individuals could use blockchain to file taxes. Along with being a substantial upgrade/overhaul to the tax system in many countries, this would also boost security and remove the widespread fraud that often affects large-scale tax systems. 

The transparency of blockchain would make it impossible to hide fraud from government agencies. And the security of the system would be a boon to citizens. 

Tracking cattle

One unique use for blockchain technology is as a means for tracking cattle. There has been an issue of tick-infected cattle undermining Zimbabwe’s beef exports in Zimbabwe, jeopardizing a valuable market for the country. External buyers want assurance that beef isn’t coming from infected cows. When they don’t get that guarantee, they’re buying beef elsewhere. 

To solve this, Zimbabwe has partnered with E-Livestock Global to track the medical history of cows using blockchain technology. Since this medical history is immutable, farmers can prove that a tick hasn’t infected a cow before a sale, reassuring buyers that the beef they’re purchasing is safe. 

Safe marriage certifications

Marriage Unblocked is another unique use case for blockchain. It uses public blockchain technology to allow couples to recite vows and marry one another, regardless of their orientation, gender, race, or other discriminated factors. 

Their marriage is validated and stored on the blockchain, where it will remain unchanged and unremoved, forever on the internet. For LGBTQ+ and inter-racial couples in discriminatory regions, this provides a safe alternative to state-owned marriage ceremonies. 

Reduce counterfeit wine

Like the farmers in Zimbabwe, wineries are using blockchain tech to verify the authenticity of batches of wine. This blockchain helps reduce counterfeit wine, which is a growing problem in the industry. 

How can you use blockchain in apps?

Of course, blockchain use isn’t limited to any of these sectors or cases. The only thing limiting how you use blockchain is your imagination, including in your apps. 

For app developers and businesses that want to invest in building an app, blockchain can increase your apps’ security, transparency, and stability in an unprecedented fashion. It can also help you craft experiences and solutions like no other. 

To learn more about how your brand can use blockchain and get help putting it all together, reach out to the team at Cheesecake Labs today.