Blockchain is a database concept introduced by Bitcoin that stores transactions and data without requiring any central authority.
Every technology has its own jargon and unique technology. Google has SEO or “search engine optimization”; Facebook has “News Feed” and What’s App: and Twitter has “tweet” that allows messages up to 140 characters along with short video.
Now digital currency, such as Bitcoin, and its rivals are building on a concept known as blockchain. Blockchain is the database concept that Bitcoin introduced to store transactions and data without requiring any central authority or repository that typically a bank acts as.
It was the brainchild of a software developer called Satoshi Nakamoto in 2009 (either a real person, made-up name, or group of software developers). Blockchain formed the basis of an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, where currency in the form of digits could be transferred electronically, more or less instantly, with very low transaction fees. The system stores bitcoins on a public ledger that is encrypted with an algorithm and accessible only with the owner’s private keys, stored in your digital wallet.
What makes blockchain so integral to Bitcoin and other digital currencies is its basic unhackability due to the random algorithms and computer nodes that control the public ledger.
Digital currency was designed to eliminate “trust” by making it virtual and software that basically keeps out hackers, so your Bitcoins or any other rival digital currency is safe because it is recorded publicly on a blockchain that is updated by computers (not middlemen human beings) working together to update the transactions, similar to the way that Wikipedia is updated and maintained by all its users.
Bitcoins can be used for contracts, buying and selling items, paying bills. Its acceptance has grown along with its critics who say that Bitcoin failed in its vision of allowing new kinds of online contracts and markets. Moreover its fluctuating price, dependent on users, makes it utility unreliable. Rivals such as Etherium are seen as taking Bitcoin a step further by such software giants as Microsoft, Google, Apple, and Amazon as a general platform where users can use the blockchain concept to solve problems in many industries other than as a currency platform by using its fairly elegant software to bridge and update databases in the cloud and to offer technological advances in uses of Big Data.
One such example is the investment bank JPMorgan. It has created a specific tool called Masala that allows some of its internal databases to interact with an Ethereum blockchain. Still other use include the enabling of music distribution and a new kind of financial auditing as ConsenSys, the Brooklyn-based start-up has done.
Where is all this pointing?
To the next big thing, Silicon Valley says. And that is artificial intelligence (AI). Based on the aggregation and algorithmic analysis of data, software developers are building platforms to bridge among all kinds of databases for all kinds of uses as a way to control real world objects in the so-called and ever-expanding Internet of Things.
See two articles that touch these technological phenomena:
Nathaniel Popper’s piece on Ethereum at http://www.nytimes.com/2016/03/28/business/dealbook/ethereum-a-virtual-currency-enables-transactions-that-rival-bitcoins.html?_r=0 and
Quentin Hardy’s piece on machine learning and AI at http://www.nytimes.com/2016/03/28/technology/silicon-valley-looks-to-artificial-intelligence-for-the-next-big-thing.html.