In our previous post, we already discussed cryptocurrency in detail, and you read about its significance. Cryptocurrency is decentralized digital money based upon blockchain technology that promotes easy transfer of money and purchase of regular goods and services without third-party interference. A significant feature that differentiates cryptocurrency from other currencies available in the world is that it is not issued by any central authority. Moreover, it is immune to government interference. Over the years, cryptocurrency has become a significant point of discussion, especially for investors. Although cryptocurrencies can be volatile, they are the future of the digital ecosystem. Before the introduction of bitcoin in 2009, transferring money was only possible through modern currency. Today, in this post, we will discuss the most-talked topic: The significance of Blockchain, elements of Blockchain, benefits of Blockchain, types of Blockchain, and many other things related to Blockchain. Have you ever wondered if there is a simpler and secure way to complete transactions? Or are you fed up with online wallets, banks, and third-party applications? If yes, switch to blockchain today!
What Is Blockchain?
Blockchain was initially introduced back in 1991 by a group of researchers with the sole purpose of timestamping digital documents so that they cannot be tampered with, almost like a notary. However, the blockchain was not adopted globally or got its due importance until 2009 when the creator of bitcoin, Satoshi Nakamoto, adopted it. In simple words, Blockchain is a unique system that allows the storing of data in a way that it becomes nearly impossible to tamper the existing data or cheat the system.
As the name suggests, blockchain consists of a series of blocks, and each block contains several transactions, which keeps adding at the time of new a transaction. To maximize security, a participant’s ledger is updated, guaranteeing transparency in working.
If we look at the current situation of the market, 84 percent of companies dabble in blockchain, which means the hype around blockchain is real. Without a doubt, blockchain is the fastest-growing skill in the US freelancers job market to the extent that top companies feel that blockchain is capable of replacing existing technologies. Looking at the surveys and words of leading industrialists, we can conclude that blockchain will be revolutionary in the coming years.
Elements Of Blockchain
Blockchain is an emerging technology that provides completely transparent information stored on an immutable ledger accessible only to network members. The key elements of blockchain are:
1. Distributed Ledger Technology
The blockchain network members can access the record of transactions and the distributed ledger. In this technology, transactions are only recorded once, which minimises the chances of duplication, which is normal in the case of traditional business networks.
2. Immutable Records
Once the transaction is recorded in the ledger, there’s no way any blockchain participant can tamper with the data or make changes. In case the transaction records an error, a new transaction must be added to reverse and eliminate the error.
3. Smart Contracts
Smart contracts or a set of rules are stored in blockchain, which is automated. This contract involves information like terms for travel insurance, conditions for corporate bond transfers, and so on.
Benefits Of Blockchain
In today’s era where everything is on the digital platform, blockchain is one step that can bring a revolution. Decades ago, when the internet was first introduced, it was something very novel, but today, none of us can imagine our lives without the internet. It is being said that blockchain is here to bring a bigger revolution than the internet. Let’s take a look at the benefits of blockchain
1. Greater Trust
As a member of blockchain, you can rest assured that you are receiving accurate and timely data, and your data is 100% confidential in the blockchain records. Note, records will only be shared with members the account holder grants permission to. Trust is believed to be the blockchain’s most cited benefit, which attracts maximum users and drives healthy relationships.
2. Decentralised Structure
In addition to enabling trust, blockchain allows sharing data in an ecosystem With no third-party involved or intermediaries included.
3. Maximum Security And Privacy
Another leading benefit of blockchain is its security and privacy as it does not include any intermediary, which minimizes the chances of fraud or theft. Blockchain builds an unaltered ledger that provides all the transactions with end-to-end encryption, shutting doors to suspicious activities. Additionally, the data is never stored in a single computer; it is spread across a network of computers, eliminating the chances of unauthorized activities such as hacking.
4. Reduced Cost
Blockchain is a decentralized structure, which means no involvement of a third party. This reduces manual tasks as well as promotes cost-saving activities.
Another big advantage of blockchain is its speed. As there are no intermediaries and fewer manual interventions, blockchain promotes much faster and more reliable transactions than conventional methods. It is recorded that blockchain can complete transactions within a fraction of seconds. However, the speed majorly depends upon various factors, such as network traffic. However, experts believe blockchain can easily beat traditional methods of making transactions.
6. Individual Control Of Data
In a world where data plays a significant role, technology like blockchain is a blessing in disguise. It allows individuals to have complete control over data that belongs to them. Individuals and institutions have the power to decide with whom and for how long they want to share a piece of information or want to keep it confidential.
7. Visibility And Traceability
Blockchain not only manages speed but also helps manage inventory, confirms the history, and responds to problems within time. Experts believe that blockchain can easily track the origins of various items, including organic items and machines.
Once the transaction is recorded on the blockchain, there is no way it can be changed or removed or tampered with. Blockchain promotes time-spammed and data-spammed transactions, which means there’s a permanent record of everything happening, making it a secure and reliable network to carry out transactions.
The last in our list of blockchain benefits is innovation, as leaders from multiple industries consider blockchain to trace and solve the existing problems, which improves the outcome.
How Does Blockchain Work?
Each block in the blockchain mainly contains three things:
- The hash of the block
- The previous block’s hash
Data: There are different types of blockchains, and the data stored inside each block is highly dependent on the type of blockchain it is. The bitcoin blockchain stores the details about the transaction here, including “the sender, the receiver,” and most importantly, “the number of coins that have been transacted.” Any decentralized database that numerous participants have managed is known as distributed ledger technology or DLT.
See Also The Role of Artificial Intelligence in Cybersecurity
The Hash Of The Block: Similarly, blockchain is a type of DLT as it is managed by several participants in which transactions are recorded with a rigid cryptographic signature popularly known as “hash.” You can compare the hash to a fingerprint as it’s always unique. Every hash identifies its block and its content through this hash or fingerprint. As soon as a block is created, its hash is calculated. Whenever there is some or other change in data inside the block, the hash will automatically be disturbed. In other words, the hash is a vital block element, especially when you want to detect the changes to blocks. If you find a change in fingerprint or hash, it’s no longer the same block.
The Previous Block’s Hash: Now the third and last element of the block is the hash of the previous block. Let us first tell you that this technique of blockchain is why Satoshi Nakamoto was able to trust this system for bitcoin as it ensures the most security of data. In a blockchain, the hash of a previous block effectively creates a chain of blocks in a tamper-proof sequence as the hash is exceptionally sensitive. Each of these blocks stores the block’s fingerprint before it, along with its own unique fingerprint. Also, any information you put into it will be stored in these blocks.
The hash interconnects these blocks, so if you try to tamper with the data of any block, the fingerprint or the hash of that particular block will automatically change, leading to the change in all the following blocks as these are interconnected, as we mentioned earlier. Eventually, the entire blockchain will be destroyed. Hence, it’s nearly impossible to tamper with the data in the block as once the data is defined, it cannot be altered later. But that’s not enough! Computers these days are exceptionally smart to calculate hundreds and thousands of hashes per second. With the right skills, you can effectively tamper with a block and recalculate all the hashes of the following blocks to make your blockchain valid again. To eliminate this possibility, blockchain offers something that is known as proof of work, which is an algorithm that slows down the creation of new blocks. These blocks are managed by the players who execute proof-of-work, popularly known as “miners.” Every new block is accepted by the network that takes about 10 minutes for the complete process.
Types Of Blockchain Networks
There are various ways to build a blockchain network those are:
1. Public Blockchain Network
As the name suggests, the public blockchain network is a peer-to-peer network that anyone can join in the world. The major drawback of the public blockchain network is less security if the user fails to strictly follow the rules, which can highly affect the individual’s decision. The most common examples of public blockchain are Litecoin blockchains and Bitcoin.
2. Private Blockchain Network
Similar to the public blockchain network, the private blockchain network is a decentralized network that anyone can join at any point in time. However, the network is governed by a well-defined organization responsible for all the tasks, including the maintenance of the ledger. If compared to the public blockchain network, it is comparatively more secure and confidential, which builds trust among participants.
3. Permissioned Blockchain Network
Businesses who decide upon the private blockchain network generally set up a permissioned blockchain network as it imposes restrictions on who will enter your private circle or view transactions. In case anyone wants to enter, they need to take permission to join in. In case the permission is declined, there’s no way the person can view records.
4. Consortium Blockchains
Unlike other blockchain networks, it is a semi-decentralized type where multiple organizations manage a blockchain network. In this type of blockchain network, more than one organization handles all the tasks and exchanges information. This type of network is majorly used by financial institutions. government organizations, and so on.
Blockchain Applications Aside From Cryptocurrencies
If you believe that the Blockchain is only used in cryptocurrency transactions, you are wrong. Blockchain technology has gone beyond cryptocurrency. With its unmatched abilities and benefits, the technology serves endless industries in ways no one ever imagined and enforces various sectors to be more efficient and agile. Below we have rounded 13 prominent blockchain applications aside from Crypto. Let’s have a look
1. Smart Contracts
Just like regular contracts, smart contracts that do not contain rules and regulations are enforced on a blockchain, eliminating intermediaries and adding accountability for all the members, which is not possible in traditional agreements. In recent times, blockchain-based contracts are gaining immense popularity in all sectors, including government, real estate, and so on.
Blockchain promotes the easy transfer of files and information about patients to medical professionals. These contracts display all the relevant information along with the details of personalized health plans for every patient.
By using the network, which is decentralized and does not involve a third party, musicians acquire the money they deserve and actually get paid on time. Mediachain is a platform that uses smart contracts to get musicians on board.
2. Personal Identity Security
According to 2017 records, more than 16 million Americans faced identity fraud and theft. By keeping all the important information confidential, including birth certificates, birth dates, social security numbers on the blockchain ledger, there has been a rapid fall in the number of thefts.
Civic is an organization that allows individuals to have a closer look at who has their information. The company uses the blockchain-based ecosystem where the users have the power to decide who can enter into their personal details and how much.
Evernym’s Sovrin is another organization based upon the blockchain ecosystem that lets individuals decide who can enter their information.
Decades ago, when the internet was first introduced, it brought an unsaid revolution in the entire world, and blockchain is on the path of bringing something big that no one ever imagined. Over the years, blockchain has gained immense popularity due to its remarkable features and benefits. Now there’s no way of going back!