Beautiful Virgin Islands

Wednesday, Jun 25, 2025

Blockchain: What is it, and why does it matter?

Blockchain: What is it, and why does it matter?

You've almost certainly heard the term blockchain. But you probably have no idea what it is or how it works, let alone why it generates so much hype. That's OK. Most people don't.

That hasn't kept it from becoming a buzzword thrown around in almost every industry, from finance to shipping to fantasy football. A-list companies like Amazon (AMZN), Facebook (FB), IBM (IBM), and Walmart (WMT) believe blockchain technology can track shipments, store data more efficiently, among other things. They aren't alone in embracing the technology, which many people believe could revolutionize logistics, food safety, banking, and even voting.

Not bad for an esoteric technology developed by the enigmatic figure who created bitcoin.

Of course, none of that answers your question: What is blockchain?

A public digital ledger


A blockchain is essentially an immutable public digital ledger. Once someone enters a transaction, it cannot easily be changed. An analogy might help explain how it works.

Think back to when people used a checkbook register to keep track of purchases and payments. Now extrapolate that to include countless transactions by millions of people and imagine that copies of the register are held by thousands of computers. Each computer must verify a transaction before it can be noted in the register. Once verified, a transaction is written in permanent ink.

The register records transactions for a set period of time, which can be as little as 10 minutes. Once the register is filled, it is stapled shut, and labeled with a unique alphanumeric sequence that identifies it. A new register is then started and glued to the first. Eventually you wind up with a chain of registers.

That's essentially what a blockchain is. The fact that these registers are stored on many, many computers makes them essentially unchangeable and unhackable. To continue with the analogy, you'd have to work backward, ungluing every checkbook until you got to the one containing the transaction you want to change before making the revision. And you'd have to repeat this process for every copy of the register. You couldn't do it without it being noticed.

The biggest advantage to public blockchains is that the information can't really be changed once it's been logged. There's a permanent record, and because the ledger is held by many entities, it's nearly impossible to hack.

The entries are also made using pseudonyms, so there's a certain degree of privacy, and no one person wields full authority over the ledger. That makes blockchain ideal for bitcoin and other cryptocurrencies.

And a great many other things — although people disagree about how effective it will be for certain applications.

A little history


The person or people behind the technology, which was created alongside bitcoin, goes by the presumed pseudonym Satoshi Nakamoto. Nakamoto, an enigmatic figure who has proved all but impossible to definitively identify, wanted a decentralized, permanent and public means of recording the creation and distribution of every bitcoin. Today, blockchains underpin a dizzying number of cryptocurrencies.

So far, people have mined more than 18 million of the 21 million bitcoins that will ever exist. Every one of them, and any transaction using them, has been recorded on a blockchain. That gives you a sense of the volume of data the technology can handle.

Although Nakamoto designed blockchain as a public ledger, it wasn't long before permissions-backed blockchains controlled by a given company or group appeared. They don't offer the same level of immutability because they're held on a far smaller number of computers. And, despite the hype, the thinking behind them isn't new.

Permission-based blockchains are 20-year-old ideas, said Nicholas Weaver, a senior researcher at The International Computer Science Institute. "Whenever someone says 'private blockchain,' just mentally replace that with a Google Doc that can only be updated."

Practical applications


Companies are using blockchains to do a variety of things such as manage pharmaceutical information, track freight shipments and trace the origin of food.

Each application touts the ability of blockchains to keep a complete record of data in a system that can't be easily changed.

Still, some people question the utility of the underlying technology. Sure, it's great for cryptocurrency. But critics scoff at the idea that it's going to revolutionize anything. "Someone who says blockchain can be used to solve Problem X doesn't understand Problem X," Weaver said.

He cites the popular example of using a blockchain to track the production and distribution of food. Advocates say it would improve safety and make it easier to, say, identify the origin of a salmonella outbreak. It would be far easier to use RFID chips or QR codes, he said. Such technology provides a more reliable record because it does not require a person to manually record the data on the ledger, a process that invariably introduces human error.

But Catherine Tucker, a professor at the MIT Sloan School of Management, sees tremendous potential in blockchain technology. She sees blockchains being most useful for managing digital currencies and tracking health and insurance data.

"I think we can all agree that the way we store and record data has not transformed in the same way that other aspects of our use of digital data has," she said. "It makes a lot of sense to identify better technologies for recording data and ensuring its integrity."

Tucker said the important thing for early adopters of blockchain technology to remember is that the technology is "evolving" and companies shouldn't embrace it just for the sake of embracing it. Instead, they ought to make sure they genuinely need the tech and, once they've adopted it, make sure they adapt to changes as it evolves, she said.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
×