Blockchain technology has been attracting attention from tech obsessives and the general public alike for some time now. Particularly as it’s essential for building and understanding the various cryptocurrencies around, which, in turn, are changing practices and trends within financial markets.

The fact there are currently so many cryptocurrencies in the headlines, all making up a highly unstable investment ecosystem, can lead to quite a negative image of blockchain, especially among those most removed from the world of technological innovation.

But blockchain is a disruptive technology that has been around for almost thirty years now. And it looks destined to transform many parts of our lives online as we look to the future, as well as how we understand consuming and exchanging information, how we use devices, and how data circulates in the cloud.

Key concepts to understand blockchain

Blockchain is a type of technology or, to be a bit more specific, a communication and data exchange protocol between two parties: party A and party B. There’s nothing new about that, because in every type of data exchange – whether online or offline – the same concepts are there. The new thing about blockchain is that it ‘encloses’ everything related to that one exchange, including the identities of parties A and B, as well as the data packet itself and all other information needed for the transaction, in what we call a ‘block’.

In order for party B to access the data sent to them by party A, that individual block needs to be ‘approved’ by members of a private, distributed and horizontal network. This network is made up of other senders and receivers from previous exchanges, or ‘blocks’. The identities of parties A and B, as well as the block data, are encrypted and can’t be identified, altered or accessed by the network. But they can confirm – through anonymised key data – that the exchange is ‘clean’ and that the block isn’t ‘corrupted’ in any way.

Once a block is approved and the transaction is completed, it becomes part of all the other blocks that make up the private network, part of a chain that can’t be tampered with and remains on the distributed network forever. As such, the way blockchain operates introduces several key concepts:

• Security
• Reliability
• Anonymity
• Independence from big technology providers
• Democratisation and horizontality within the distributed network
• Information encryption

What will make blockchain more widespread in future?

Thanks to these specific characteristics of blockchain technology, all processes involving online data exchange – 99% of them – could be profoundly changed in future. And this will help with the development of some new realities in the online world:

The metaverse: the various virtual reality worlds, or metaverses, that are currently in development are being built with blockchain as one of their foundation technologies. The metaverse, once it becomes widespread, will be possible thanks to blockchain.

Gaming: the digital recreation industry is also banking on blockchain to do well. Blockchain-based gaming grew by 2,000% in the past year alone, representing 52% of all blockchain technology activity. And that trend looks set to grow even more.

Web3: or, to put it another way, the evolution of the way we currently understand the Internet. Web3 will introduce two key elements: the return of control over information to users themselves through decentralisation and independence; and trust as the backbone of all relationships and data exchanges on the network.

NFTs and ‘tokenisation’: NFTs – non-fungible tokens – are groups of data that make up a unique ‘digital product’ that can’t be reproduced, which is stored in blockchain and can be bought or sold, including the likes of digital artwork and exclusive virtual products. NFTs will become commonly seen commercial goods online a few years from now, alongside the ‘tokenisation’ of real-world products and services that take on a new life on the network.

DeFi: or decentralised finance. This involves vast databases – in blockchain chains – that form part of an emerging financial system beyond the influence of traditional banking and financial institutions. Using blockchain, this is said to be more independent, transparent and secure than standard systems.

Blockchain is about much more than just a few cryptocurrencies or something for Internet geeks to play around with. It will become the ‘cement’ that binds global networks of the future and many users, companies and even governments are starting to realise its full potential.