The digital currency Bitcoin is a risky bet, but the technology it’s built on is poised to fuel the next startup revolution.
The public ledger of all Bitcoin transactions is called a blockchain, a secure and verifiable record of all buying and selling. It’s the primary technical innovation of the cryptocurrency, and it has the potential to disrupt a host of industries ranging from finance to entertainment.
Blockchain verifies transactions are valid when computers on the network solve a complex math problem. There is no central authority required to oversee the chain because each new block is connected to the prior one in a digital chain algorithm, becoming part of the global ledger.
A simple way to think of this is in terms of StubHub. If the ticket reseller used blockchain technology, it would never have to worry about counterfeit tickets popping up for sale on its website because every ticket would be easily traced back to the original vendor.
Blockchain records can never be modified, which has the result of “automating” trust, eliminating the need for intermediaries. At its core, the blockchain framework is decentralized — requiring no centralized body or authority to verify and update records. In essence, this technology is about