At Datanet, we have customers who are hosting their cryptocurrency mining rigs in our data centre. The mining rigs are whirring away (staying cool) generating this elusive Internet money. The digital technology known as blockchain is the technology that underpins cryptocurrencies. In fact, cryptocurrencies cannot exist without the blockchain. So, what is the blockchain?
The blockchain (or distributed-ledger technology) is an openly accessible database of transactions which we can liken to a paper ledger. The big difference is that, unlike a paper ledger, it isn’t stored in one place, it is distributed across many different computers which could be situated in many locations across the world. Each digital transaction in the blockchain is time stamped and recorded in the database. The digital transactions are then verified, encrypted and added to the chain of blocks using complex algorithms. This encryption process, known as “hashing” is carried out on many computers across the distributed network and after a successful hash each block in the chain will receive a unique digital key. All users in the distributed network can view all the transactions that have been recorded in the electronic ledger (the blockchain) and the hashing process is a one way process meaning that the hash cannot be converted back into its original data. This makes the blockchain virtually incorruptible (in theory)
Whilst cryptocurrencies rely on blockchain technology in order to exist, the blockchains can exist in their own right and could be used to keep track of a multitude of other things. In fact, anything of value could be tracked and managed using blockchain technology. (for example a blockchain could be used for medical records, tickets, house sales etc..)
In brief, the blockchain is the data management piece and the cryptocurrency is just one of many things a blockchain can manage. As the blockchain reduces the need for central intermediaries, the processing of transactions should, in theory, be much more efficient than those that we do today and could be applied in any business or to manage anything of value. So, whilst cryptocurrencies may come and go, the blockchain technology could have a long future ahead. We will be watching the progress of the blockchain with interest.
If you would like more information about hosting your mining rig at Datanet then check out our Cryptohosting offers or give Jeremy a call on 01252 810010 to talk about