Blockchain 101- WHAT EXACTLY IS BLOCKCHAIN?
Blockchain is a buzz word that has gained a lot of traction in the healthcare industry lately, but what exactly is it? It’s praised for potentially introducing a new age of security, confidentiality, and availability; but what exactly does it do? The short answer is - it’s a shared, distributed system that records and stores transaction records in a digital ledger. The long answer is much more complicated than that. Blockchain technology has a huge potential to change the way future technologies are designed and managed, but industries shouldn’t expect too much until the majority of people understand exactly what it does.
There are three principles of blockchain security, each with their own unique impact. The first principal is a peer-to-peer network. Each user in the peer-to-peer network has a “wallet” with cryptocurrency (tokens), a digital signature, and two keys; one being a public key and the other a private key. Public keys are known to all of the network participants and are used for encrypting and receiving transaction data. Private keys are only known to the user and are used for generating transactions and decoding data. Finally, digital signatures prove ownership and integrity of transaction data.
The second principal is distributed consensus. Distributed consensus requires a majority of users in a particular network to agree on the accuracy of the data. This can be difficult to achieve, but it does eliminate the need to require a trust central authority and ensures users that the data they are viewing is accurate. This is mainly achieved through proof-of-work or proof-of-stake systems, although proof-of-elapsed-time consensus is being added into the mix as well.
The third principle is the one that gets the most attention: encryption protection. Public key cryptography is a form of data protection where the “keys” used to encrypt and decrypt data are different. Blockchain uses this approach to ensure the security of information as it travels across the network, and further protects completed transactions by making the data immutable. In order for network users to change the state of their assets, they must generate a new transaction, adding another “block” to the “chain”. Any updated information is then encrypted into the tamper-proof "blockchain" for all network users to see.
On top of the three principles, there are a handful of essential elements that are important to know if you want to truly understand blockchain:
Network User any individual with a “wallet” involved in particular blockchain
Transactions Any user can create transactions and submit them to the network, and include the public key of the receiver, information about the value of the transaction, and the senders digital signature
Authentication after a user sends a transaction, nodes authenticate the transaction by decrypting the digital signature and comparing it against the history of validated transactions
Blocks – validator nodes, or “miners”, select pending transactions and create “blocks” using the different consensus models
Blockchaining Once a majority of the network validates a block through a consensus algorithm, miners “chain” it to the blockchain using a “hash”
Hash Unique fingerprint of the code in the previous block of the blockchain
Blockchain has the potential to be the “next big thing” in healthcare, but it’s still pretty early in the adoption cycle. More and more users need to understand what it is and what exactly it accomplishes before expecting to just roll it out - especially in the healthcare industry.