What is a Blockchain?Blockchain is an arrangement for transferring information globally. It is a secure and unshakeable network. In technical terms, blockchain is an unchangeable digital ledger of records. These ledgers are connected via cryptography and stores verified transactions.As of 2018, the blockchain technology market had a total valuation of US$ 1.2 billion. This is expected to grow to more than US$ 23.3 billion by 2023.
How does blockchain work?We will understand this with a very simple example.Imagine a page consisting of 30 transactions chronologically. The first transaction is recorded first and so on. Now, it is very simple to manipulate these records on a piece of paper. One can overwrite, scribble and tamper with the entries. Someone might make a replica and replace the original paper.But that wouldn’t be the case if all these transactions are recorded using a special code language. Say, for example, a combination of letters and numbers. To make it even stronger, every new code created is related to the previous transaction code.If a transaction is approved by a majority of these computers, this page becomes a part of a diary. This diary has the capacity to save a maximum of 50 pages. Once the diary reaches its capacity, we start to maintain a new diary. Imagine this entire process to be online. That is what blockchain technology is.Let those 30 records you imagined be 30 digital transactions. Every transaction is secured with a hash. Every transaction generates a hash which is a string of alphabets and numbers. The hash created depends on the previous transactions which makes it unique.Those 30 different computers are called nodes. Every node has to verify every transaction. The nodes check to make sure a transaction is valid by inspecting the hash. A single diary consisting of a finite number of records are the blocks. And the group of diaries are nothing but the blockchain.Each block refers to the previous block and together make the blockchain. It is effective as it is spread over many computers, each of which had a copy of the blockchain. There are four to five layers of security to every single transaction. Hacking even a single layer is almost impossible.Once a transaction is recorded and updated on the Blockchain, it cannot be altered. No one can turn off a Blockchain.
Understand its features:Blockchain is like a universal ledger. You can trace back any event. No one can tamper with the past entries. No one owns the chain. A blockchain has a finite length containing a finite number of transactions. The number of transactions increases over time with every block.Identical copies of the blockchain are stored in every node previously involved. This software network is decentralized i.e., no authority dictates.
Advantages of using blockchain:If used to its full potential, blockchain is here to disrupt and transform traditional business models. Many significant benefits can be achieved by implementing this technology. Let’s look into these benefits and learn more about blockchain -
- Reliability and Transparency
- Reduces Cost
- Increased Efficiency and Speed
Other uses of blockchain:Blockchain’s use is not limited to cryptocurrencies. Its distributed ledger technology has applications in a variety of sectors.Blockchain has applications in industries who need to store information or transfer data. For example -
- Elections and Polls
- Warranty Claims
- Identity Verification
- Land Records