Blockchain Technology has been heard of a lot in the past few years. Most of you must have heard it in relation to cryptocurrencies like Bitcoin.
Blockchain is just another cliche, but in hypothetical terms. To a layman, it may not make any sense. However, it is of vital importance to learn about Blockchain technology. It has been reported that the demand for cryptocurrencies has reduced over recent years and the reason behind it lies with businesses preferring traditional methods rather than going with Blockchain technology.
It is mostly that, people with prejudiced perception from the report findings expect a lot from Blockchain Technology. But on the other hand, blockchain technology has real value, that, over time, the scope of it will become wider and hence become more user-friendly.
What is Blockchain Technology?
Blockchain technology is nothing but a structure storing transactional records (also known as the “block”) of the public in several databases (the “chain”), in a peer-to-peer node connection. This storage is referred to as Digital Ledger. Each transaction in it has to be authorized by the owner of a signature, which keeps it safe from any kind of tampering making it highly secure.
It is more like a Google sheet shared in the network that contains transaction records based on actual purchases. Also, owing to its safety, it can be viewed by all but is safe from any tampering.
Popularity of BlockChain
Transferring money online seems simple to all of us. But a lot goes behind the scene and not everyone is aware of it. These activities can be un-secure enough. To forgo this, third party applications are mostly used. And therefore Blockchain technology was created. Blockchain, as we know, is a digital ledger that has gained a lot of attention recently. Let us see why it has gained all the popularity.
The important part of a business involving data is usually handled by the business itself or handed over to third-party like brokers, bankers, or lawyers, which in turn increase the time, cost, or both on the business. However, Blockchain is the solution to control the investment in time and money. Blockchain can also be used in various industries like finance, supply chain, manufacturing, etc., whereas Bitcoin which is often confused with Blockchain is only a currency that works on Blockchain.
Advantages of Blockchain
Blockchain uses the concept of digital signature to carry out fraud-free transactions. This way prevents the system from being compromised by unwanted resources. The authentication by digital signature will only allow making rightful changes within the network.
Putting aside the conventions of involving officials to approve your transactions, blockchain allows transactions with the mutual consensus of users. This methodology results in an easy, secure, and faster transaction.
Blockchain technology being programmable, can generate systematic actions, events, and payments automatically as and when the criteria are met.
How Does Blockchain Work?
Although Blockchain has been in the market for the past few years, there is a scope for active development in the future.
Blockchain combines cryptographic keys, peer-to-peer network containing a shared ledger, and a means of computing the records and transactions. Cryptographic keys are two types – a public key and private key which are used for the transactions between two parties. Each individual deals with two keys to produce a secure digital identity reference which is the most important aspect of Blockchain. This is what the term ‘digital signature’ is referred to as.
This signature is merged with a peer-to-peer network, which is shared to reach a consensus on transactions, among other issues. Only for verification, any kind of transaction, or changes are permitted.
How does the Transaction occur?
The most important and valuable thing of Blockchain is the authentication it uses to handle transactions. For a transaction to occur between two parties with two of the keys, the first party requires to attach transaction information on to the public key of the second party, and the complete information is contained into a block. The block contains all the relevant information like digital signature and timestamp however, it doesn’t include individual identities. This block is transmitted over the network and can be accessed by a matching private key only, to complete a successful transaction.
Blockchain uses hash encryption for securing data and mainly uses the SHA256 algorithm for the purpose. All the details are transmitted using the SHA256 algorithm and are called hash encryption. This can be transmitted throughout and only added to block chain on verification, thus making the transaction secure.
Further, a blockchain has four main headers. Previous hash locates the address of the previous block, the second contains the transaction details that are to occur, third is nonce, an arbitrary number given in cryptography to differentiate the block’s hash address and the final is the hash address of the block.
The process of adding transaction details to the present digital/public ledger is called ‘mining’ in Blockchain terminology. Mining generates the hash for a block which makes it secure throughout and hence the safety is ensured.
Blockchain is being used in a lot of industries and serving well. The prime implication lies in financial services like digital wallets and payments. It is also being used with international transactions sidelining with the concept of TRUST. Blockchain is also being used in voting calculations and in the world of IoT. This doesn’t limit it, blockchain can further be integrated with apps that involve transactions of money or payments like Ola, Uber, or in the healthcare or in the private sector. The transaction information on this platform is transparent from point to point to all the users.
Summing it up, blockchain can be employed in various sectors by molding it according to the industry. The fact that blockchain allows a secure platform for consensus transaction, is taking up on the market encouraging the founders to lay the ground to work on the expansion of the blockchain technology. Tracking the success, it can be guessed that the Blockchain technology is soon going to be the King of the Digital world.