We’ve All Heard the Words ‘Bitcoin’ and ‘Blockchain,’ but What Are They?
Lee W.McKnight is an associate professor in the School of Information Studies, faculty advisor to the Worldwide Innovation Technology and Entrepreneurship Club and an affiliate of the Institute for National Security and Counterterrorism. He is also an expert on Bitcoin and its underlying technology, Blockchain. Chris Chomicki is a junior studying information management and technology and computer science in the iSchool He also works as a web developer for SIDEARM Sports and is also an athlete on the Division I Cheerleading Squad at the University. Together, they answered some questions about Bitcoin and Blockchain for those of us who are not technical whizzes.
For more information: Register for McKnight’s webinar Feb. 14, noon-1 p.m. EST, titled: “After Cryptocurrency: Blockchaining the Internet of Things.”
01Is Bitcoin a cryptocurrency?
Its originators imagined it was, and current speculators may also be confused, but no. Bitcoin and other crypto’currencies’ are actually commodities, or assets.
02What is Blockchain?
Blockchain is a new distributed ledger technology that is the underpinning of Bitcoin. The blockchain contains a true, verifiable record of all transactions. Each entry is time-stamped, verified and linked to the previous one. This eliminates the need for third-party intermediaries to maintain trust on the ‘chain,’ since the blockchain auto-verifies every transaction. Each digital record or transaction in the thread is called a ‘block,’ for either an open (public) or controlled (private) set of users. The blockchain is either an invention from about 10 years ago by a guy named ‘Satoshi Nakamoto’ who lives in San Diego, or is an invention by a small group of coders/developers who anonymously released Bitcoin open source code under the alias Satoshi Nakamoto.
03Why is Blockchain important?
When new data is entered, it can never be erased—it is immutable. Networks that run on a blockchain reduce transaction costs, because fees do not need to be paid to verify transactions.
04How secure is Blockchain?
Blockchain is a secure, highly distributed way to store data with no single point of attack for hackers. Thieves steal users’ ‘digital wallets’ and crack ‘cryptocurrency exchanges’ instead.
05How can a blockchain verify transactions?
Blockchains are updated with new transactions when consensus on the validity of the proposed entry occurs. Individuals and devices cooperate in maintaining and updating the ledger to not permit any false transaction onto the blockchain. When a false transaction is attempted, devices in the network quickly reach consensus to prevent entry
06Where is blockchain used today?
- Fintech: Verification of cross-border payments raises transactions costs. However, current blockchains, including so-called cryptocurrencies, cannot handle the transaction volume of Visa, MasterCard, PayPal or Venmo. “Fintech,” or financial technology blockchain start-ups using Ripple, seek to improve the trust, efficiency and speed of processing financial transactions.
- Supply Chain: Data in the supply chain cannot be tampered with, as the data in a blockchain is immutable. Individuals therefore can trust the data about where items are in the supply chain. Firms such as IBM and Maersk are seeking to create trusted supply chain with blockchain.
- Healthcare: Healthcare data must be private and secure. By utilizing a blockchain, only authorized users can access the data and change the distributed ledger. Firms are exploring blockchain use so patients can permit real-time clinical data access for physicians, so professionals can make accurate, trusted medical decisions.
About Syracuse University
Founded in 1870, Syracuse University is a private international research university dedicated to advancing knowledge and fostering student success through teaching excellence, rigorous scholarship and interdisciplinary research. Comprising 11 academic schools and colleges, the University has a long legacy of excellence in the liberal arts, sciences and professional disciplines that prepares students for the complex challenges and emerging opportunities of a rapidly changing world. Students enjoy the resources of a 270-acre main campus and extended campus venues in major national metropolitan hubs and across three continents. Syracuse’s student body is among the most diverse for an institution of its kind across multiple dimensions, and students typically represent all 50 states and more than 100 countries. Syracuse also has a long legacy of supporting veterans and is home to the nationally recognized Institute for Veterans and Military Families, the first university-based institute in the U.S. focused on addressing the unique needs of veterans and their families.