- What is blockchain technology?
- Blockchain is gaining more attention. Know why?
- Benefits of blockchain technology
- How does blockchain work?
- Process of blockchain transactions
- Effects of blockchain technology
- Disadvantages of blockchain technology
- What is blockchain?
- Is blockchain safe?
- What can blockchain do?
- Why is blockchain decentralized?
- Will blockchain be the future?
What is blockchain technology?
Blockchain technology is a configuration that keeps stocks of transactional records, also called Block, of public in numerous databases called chain in a selected network that is connected with peer to peer modes. Usually, this storage is called a digital ledger.
Each transaction in this ledger is accredited by the digital signature of the respective owner. The owner validates the transaction and protects it from getting tampered with. Hence all information that is present in the digital ledger is safe.
To explain in simple words, a digital ledger is similar to a Google spreadsheet shared among various computers in a network containing transaction records about actual purchases. The exciting part is anyone can access the data but cannot tamper with it.
“The blockchain symbolizes a shift in power from the centers to the edges of the networks.”– William Mougayar
Blockchain is gaining more attention. Know why?
For any business keeping a record of data as well as transaction is significant. Most of the time, this information’s is managed in-house or by a third party like a broker, banker, or lawyer that increases cost, time, or both. Blockchain helps avoid this lengthy process and allows fast movement of this transaction, saving both time and money.
You might be among those who think Blockchain and Bitcoin can be utilized interchangeably, but it’s not the case in reality. Blockchain is a type of technology that supports several applications in several industries like supply chain, finance, etc., but Bitcoin is a type of currency that depends on Blockchain technology to remain safe.
Benefits of blockchain technology
Blockchain is an evolving technology with several advantages in this digital world.
- Highly safe
Blockchain transactions make use of a digital signature to perform tamper-free transactions. It is not possible to corrupt the data of any individual by others without the specified signature.
- Decentralized system
Usually, you require approval from regulatory authorities such as a bank or the government for doing transactions. But with Blockchain technology, all transactions are carried out with the mutual agreement of the users that results in smooth, safe, and fast transactions.
- Capable of automation
Blockchain is programmable. When all criteria are met, it can create everyday actions, proceedings as well as payments automatically.
How does blockchain work?
All these years, you might have been seeing that several businesses across the world incorporating Blockchain technology. But how blockchain works, do you know? Is it a substantial change or only an addition? Well! The progressions of Blockchain are young, and in the future, it keeps the high potential of getting revolutionized.
Let us identify the technology.
- Blockchain is an amalgamation of three leading technologies
- Cryptographic keys
- A peer to Peer network that consists of a ledger.
Mode of computing that keeps the transactions and network records.
Cryptographic keys comprise two primary keys, i.e., a private key and a public key. These keys together assist in doing successful cryptocurrency transactions among the parties. Every individual involved in Blockchain transactions contains these two keys. They use to generate a safe digital recognizing reference. This is one of the most potential advantage of Blockchain. This safety feature is called a digital signature and is utilized for accrediting and managing transactions.
A digital signature is mixed with Peer to peer network consisting of a ledger. All people who are authorities make use of this digital signature to reach an accord on every transaction. To summarize, all Blockchain users utilize cryptography keys to do various kinds of digital transactions over peer to peer network.
Process of blockchain transactions
One of the crucial features of Blockchain is the way by which it approves and allows transactions. For example, if any two-person wants to do marketing using a public and private key, the first person would accord the transaction data to the second person’s public access. The complete information is collected all together into one Block.
This Block consists of a digital signature, a stamp, along with other crucial data. It would help if you kept in mind that the Block does not recognize the individuals involved in the transaction. The Block is then communicated through all the network knots. The right person makes use of the private key and then matches it with the given Block. This way, the transaction is completed.
Furthermore, besides doing all financial transactions, Blockchain also keeps all details of transactions of vehicles, properties, etc.
Effects of blockchain technology
Blockchain technology has had a significant impact on society. Let us see some of its important implications.
- Bitcoin, Blockchain’s primary application and the main reason behind the development of the technology. It has assisted several people with financial services like digital wallets. It has introduced a new life in the world economy by offering microloans and micropayment to people.
- The subsequent impact is the concept of Trust, specifically within international transactions. In earlier times, lawyers were mainly hired to make up the gap between the parties, but it was consuming a lot of money and time. But with Blockchain Cryptocurrency, the trust equation has changed. Several organizations are located in areas with scarce resources and high corruption. In this scenario, Blockchain offers a significant advantage to these peoples and organizations, helping them easily avoid erratic third-party mediators’ tricks.
- Blockchain technology can generate a distributed peer-to-peer network for many organizations as well as apps such as Uber. IT helps people to make payments for things like parking, toll payment, etc.
- Blockchain technology is also used as a safe platform for the healthcare sector to store sensitive data of patients. Health-based organizations can make a centralized database with the help of technology and can easily share information with appropriate accredited peoples.
- In the private sector, Blockchain can be used by two parties wishing to have a private transaction. In a Blockchain platform, all transactions can be easily tracked right from departure to the destination by every user of the supply chain.
Now with so many positive impacts, are there any drawbacks of Blockchain technology?
Disadvantages of blockchain technology
- Blockchain cryptocurrency makes use of excess energy.
- It is not an extensive scattered computing system.
- Blockchain mining does not offer network safety.
- Entries do not survive longer.
- Poor scalability.
To summarize, Blockchain can be easily set up for operating in several ways by using various mechanisms to save a consensus on transactions. It is seen only by authorized users. Bitcoin only shows how Blockchain has developed.
The founders are also trying several other applications for expanding Blockchain and for eliminating the drawbacks. Seeing the level of success and enhanced use, it looks like Blockchain will rule the whole digital world in the future.
FAQs (Frequently Asked Questions)
What is blockchain?
A Blockchain is a dispersed, safe database configuration that facilitates the network participants to maintain a trustworthy and absolute record of transaction data without third-party mediators. They have been proved to be superior solutions for safe coordination of data and other functions such as tokenization, attack protections, decreasing counterparty risk, etc.
Is blockchain safe?
Blockchain technology is a powerful technology that protects the whole integrity of all critical information. It has become increasingly prevalent in recent years, with cryptocurrency markets moving towards the center stage. The main reason behind its prompt adoption is that it is designed to provide matchless security to all digital information.
What can blockchain do?
Blockchain technology can:
- Make easy processing of payments and money transfer.
- Supervise supply chains
- Helps in creating a decentralized digital ID
- Allows digital voting
Why is blockchain decentralized?
Blockchain is decentralized because it facilitates the transfer of control and decision-making from a central entity to a dispersed network. It helps decrease the trust level that all participants should place in one another and discourage their capability to put control over each other. Thus, decentralization helps in avoiding the degradation of the network functionality.
Will blockchain be the future?
With so many benefits and features, it seems Blockchain can revolutionize and will rule the whole digital world in the coming future. It will bring evolution in various industries but its acceptance needs time and effort. In coming day’s government will accept all benefits of Blockchain and start using it for enhancing the financial and public services.