Blockchain

Blockchain technology is currently the most debated issue on many forums worldwide. It expects to influence future financial industry innovation significantly. It enables the development of immutable transaction records visible to all network members. Financial analysis, budgeting, and modeling are very important aspects of the blockchain industry. 

In this article, we will cover the following: 

• What is meant by blockchain?      
• Origin of Blockchain Technology
• How does blockchain work?
• Attributes of blockchain
• Classification of blockchain technology
• Need of blockchain
• Benefits of blockchain
• Limitations of blockchain technology
• How is blockchain essential for operating bitcoin?
• Applications of blockchain technology

What is meant by Blockchain?      

In simple words, blockchain is a record-keeping system that gained popularity following the introduction of Bitcoin. This technology links to financial institutions and investment organizations. We keep records of the information we collect about various transactions, including credit and debit card data. It is the manual record-keeping technique; the manual records are the ledger. Blockchain refers to the process of keeping a record of information and data in the form of databases that are saved electronically on a computer system. It can also be considered a digital ledger.

It is a technique for capturing and keeping information that cannot be altered or hacked. Every computer that links to this system has access to the data and information stored in the blockchain. It is governed and controlled by a group of people rather than a single person or authority. As a result, the technology is also known as the distributed ledger system.

Origin of Blockchain Technology

Cryptographer David Chaum proposed the blockchain protocol for the first time in 1982. In his dissertation, he introduced the concept of “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups.” In 1991, Stuart Haber and W. Scott Stornetta were the first to develop the notion of blockchain. 

The notion of blockchain became a reality in 2008, and Satoshi Nakamoto created this technology. In his initial article, he titled this technology Block and Chain, i.e., two words; however, in 2016, the technology was renamed blockchain, a single word. This technology arose with the introduction of the cryptocurrency known as Bitcoin. Nakamoto intended to develop a Bitcoin ledger as a decentralized system that anybody connected to the system could evaluate.

How Blockchain Works?

• Since the information saves in distinct blocks that link in a sequence, this technology is known as a blockchain. Every block in the blockchain has a finite amount of storage space for data and information.
• Every block in the blockchain contains its own data, a cryptographic hash that is unique to each block, and the preceding block’s hash.
• Every block contains a hash of the preceding block, which aids in connecting the blocks to construct a blockchain. The genesis block is the only one that lacks a hash of the preceding block. It is produced first and hence lacks any prior block hash.
• Any effort to modify the data and information stored in blocks changes the hash of the block. Thus, changes in the hash of one block cause changes in the hashes of other connected blocks. Therefore, it disrupts the data of all blocks on a blockchain.
• Different persons connected to this system can evaluate the blockchain. Nodes are persons linked to this system via their computers. Miners are individuals linked to this system who check the information of the blocks. 
• The computers connected to the blockchain network can quickly analyze the information recorded in the blockchain, preserving the data’s privacy during this process.
• The data on blockchain is updated every 10 minutes.

Attributes of Blockchain

There are certain characteristics unique to blockchain technology, which are the following:

A Decentralized Technology

The records of various transactions and information may be generated on computers using excel sheets; however, there is a difference in collecting data in a blockchain. A single person or institution does not exclusively handle the information included in the various blocks of a blockchain. Instead, everyone on the network has a copy of the information on their computers so that no one can change it.

No Need for Third-Party

A third party is not required to be involved in any contact between two parties. So, using blockchain technology, engagement and transactions are simple.

Change of Data in the Blocks is Impossible

It is impossible to modify the data recorded in the blocks. It is because a change in the contents of one block changes the hash of all future blocks. As a result, modifying the data contained in the blocks is almost impossible.

Detecting change can be easy

Other network users quickly spot the attempt to modify information in the blocks.

Classification of Blockchain Technology

The blockchain technology network is categorized into four categories:

Public Blockchain

The public blockchain is a chain of information with no access limitations. Any member in the network may view blockchain’s history and conduct any transaction. On this sort of blockchain network, information may be quickly moved and viewed by anyone all over the world without any previous authorization. The Bitcoin blockchain illustrates a public blockchain.

Private Blockchain

This sort of blockchain network requires authorization to access information. Nobody can join this form of blockchain network without the owner’s authorization. Moreover, only trustworthy individuals have access to the digital ledger in this sort of blockchain. Several organizations and businesses typically control this sort of network.

Hybrid Blockchain

This form of blockchain network combines the benefits of both centralized and decentralized blockchains. The percentage of centralization and decentralization determines the hybrid blockchain’s operation.

Sidechains

It is the blockchain network that runs concurrently with the principal blockchain. The side chains operate independently of the leading blockchain.

Need of Blockchain

The introduction of the internet and other technologies has led to the development of several digital technologies worldwide. Blockchain is a new and growing concept in society, but it is gaining popularity at a rapid rate. Previously, when no such technology existed, individuals took notes and kept records and information in writing. Manually recording data made mistakes most likely. Furthermore, the data and information could be easily altered, which led to corruption.

There is an urgent need for a technology like Blockchain to ensure the security and transparency of recorded data. It will also aid in winning people’s trust since they can access the information in the blocks without worrying about being cheated. The transaction is available on all computers connected to the blockchain network, which certifies the transaction’s security. Banks choose this technology for money transfers, record storage, and other technical tasks.

Benefits of Blockchain

• The Blockchain enables us to obtain precise data on which people may depend. We will share private records in blockchains exclusively with network users who have been authorized access by us.
• Blockchain technology indicates that the technique is highly secure because nobody can edit the transactions that are recorded in the blocks, and network users immediately discover any alteration.
• The adoption of blockchain technology eliminates third-party participation in transaction and record-keeping operations. As a result, there will be no additional fees for transactions using blockchain technology.
• Blockchain technology is efficient because data and information can be saved without wasting unnecessary time and effort.

Limitations of Blockchain Technology

• Verifying transactions on blockchain requires a large amount of power or electricity. 
• Since the private key on the blockchain safeguards Bitcoins, it must be kept hidden. Knowing the private key implies disclosing information about Bitcoins to a third party. As a result, it is critical to keep these keys safe from unauthorized access. These keys, if lost, cannot be recovered, and any money stored in them is likewise gone.
• Blockchains are distributed ledgers that are present on every computer of every network user. Any transaction that all members do not verify cannot be included in the blocks. The verification of the transaction from a large number of people takes time, making it a time-consuming procedure. As a result, transaction speed is reduced.

How is Blockchain Essential for Operating Bitcoin?

Bitcoin is a digital currency governed by the blockchain. There is no authority in charge of running a cryptocurrency. Every Bitcoin transaction is recorded in the blockchains. Furthermore, digital currency alternatives are disseminated among the network’s machines. Therefore, it makes it easier for Bitcoins to operate without the intervention of a central authority. The data from Bitcoin transactions are recorded in blocks. Therefore, it is a risk-free and secure way to use Bitcoin.

Blockchain Wallet- The blockchain corporation provides this digital or E-wallet service. It allows blockchain network users to store, manage, transfer, and exchange cryptocurrency. In addition, the wallet is well-equipped with security safeguards that serve to reduce the likelihood of online fraud and theft.

Applications of Blockchain Technology

Development of Smart Contracts-

In business, many parties sign contracts or agreements to exchange services and products. It occurs mainly on paper, which is prone to many forms of mistakes and fraud. Therefore, the emergence of a new technology known as smart contracts in blockchains makes this task more accessible and secure. Everything happens precisely as it does on paper with this technology. The only difference is that it is digital and may be implemented by the user.

Voting and Elections

Manual elections in the country increase the likelihood of mistakes. During the nation’s elections, there is a lot of talk about electoral fraud. If implemented in voting and election systems, smart contracts may lessen the likelihood of such mistakes and fraud. It will also assist the country hold free and fair elections.

Reduce the Chance of Cyber Crimes

With the rapid speed of digitization, cybercrime is becoming increasingly frequent. Every now and then, many individuals become victims of cyber fraud because hackers take the information of their online transactions. Blockchain technology aids in the digitization of documents, allowing users to conduct online transactions and interactions more efficiently.

Prevent Copying of Original Contents

Websites make it simple to get information and articles on various topics. Unfortunately, this content is often duplicated and used without the consent of the article’s creator. In addition, blockchain technology enables authors to protect their written articles’ copyright by registering their work online in smart contracts with complete secrecy. As a result, there will be no possibility of changing or copying the writers’ work, and the owner’s power over the content will be completely limited.

Conclusion

Blockchain is a new technology that currently associates with cryptocurrency. However, it also expects to be relevant in various industries in the near future. It is being tried for the same purpose in several areas around the globe and in the banking and commerce sectors in several nations. This technology is rapidly gaining popularity, and it has the potential to revolutionize numerous sectors. Therefore, the development of such technology is critical in the near future.