What Is Blockchain?
Published by Primetics on 5/03/19
Welcome to the first blog in our blockchain series. In this series of blogs posts, Primetics General Manager Leigh Roberts talks about what blockchain is, how it could be used in the agriculture industry, and the challenges of implementation.
Blockchain is currently a hot topic. People from all different sectors are talking about it, heralding it as the future.
However, there is still quite a bit of confusion about what blockchain actually is. I’ve recently been learning lots about blockchain and how it could impact on the agriculture industry.
I decided to write a series of blogs about blockchain to explain what it is, how it is used, the possibilities it might bring for agriculture and its potential pitfalls.
So first things first: what is blockchain?
Put as simply as possible, blockchain technology refers to a list of records (‘blocks’) linked together using cryptography (making the ‘chain’). The records are stored in multiple locations at once and controlled by multiple parties, or ‘nodes’. This makes it very secure, because transactions or changes have to be approved by everyone in the network, and there are more people to spot anomalies in the network.
How is a blockchain structured?
As mentioned, a blockchain is made up of a series of records, referred to as ‘blocks’. A block is a chunk of data that is identified using cryptographic ‘hashes’.
A block contains three pieces of information:
- The data being stored
- The block’s unique identifying hash
- The hash of the previous block
So let’s break that down
The data being stored can be any information, so will differ depending on the industry and application of the particular blockchain.
As the most famous use of blockchain is the cryptocurrency bitcoin, let’s use that as an example. In a bitcoin transaction, the data of a block will record data about bitcoin transactions that have been made (usually about 500 transactions are recorded in one block).
The block’s unique identifying hash is a unique combination of letters and numbers that identifies the block and includes a timestamp. It is generated using the hash of the previous block, in order to place it in the right place in the blockchain.
The hash of the previous block is also included in the block, again to show where the block occurs in the chain.
The creation of a block requires all of this information, plus the approval of a majority of members of the network.
Any edits to a block also require approval, so they don’t happen very often and are difficult to carry out – meaning that information stored in the blockchain cannot be easily accidentally duplicated or hacked.
How does blockchain work?
Now that you know the structure of blockchain, it is important to understand how it works. One of the key features of blockchain technology is that it is what is known as a distributed ledger. To put it simply, this means that it is a database which exists across several locations or is shared among multiple participants.
How is this different to other types of software?
Most businesses and companies use a database which is centralised and lives in one fixed location.
In blockchain, the blocks that make up the chain become part of a shared database which all involved parties have access to at the same time.
Those computers that have access to the chain and oversee all transactions are referred to as nodes or miners.
Every new data entry must be confirmed by a majority of nodes before it is encrypted with a unique hash.
The reason that maliciously editing the blockchain is so difficult is that must be approved by a majority. This makes it very secure, and is the biggest difference between blockchain and a traditional database.
Why is it becoming popular?
Lots of businesses and organisations are beginning to explore blockchain because it is very secure, reduces risk of errors, promotes transparency and cuts down on operational inefficiencies.
Could it be used in agriculture?
There is potential for blockchain to deployed in a range of different industries. In the agriculture industry, one potential application of the technology is for supply chain management. The increased transparency and efficiency of blockchain has the potential to further improve the traceability of produce and create accountability along the supply chain.
We’ll look into this more in the second blog of our blockchain series: How Could Agribusinesses Take Advantage of Blockchain?, along with other possible uses of blockchain in the agriculture industry.
For all its strengths, like many technologies, blockchain has significant flaws also. In the third and final blog of the blockchain series, The Blockchain Challenge for Software Suppliers, we will also touch on what I believe those to be.« Back to Blog