Blockchain is the new word of the day . But a lot of us are not completely aware of what it is or how to describe it to others. A lot of the time people think that Blockchain is Bitcoin and vice-versa. But it’s not the case. In fact, Bitcoin is a digital currency or cryptocurrency that works on Blockchain Technology.
Blockchain technology has been on the spotlight for some time now. Even though there are some mixed feelings toward this technology as people struggle to grasp how it works, no one can underestimate its role in the global economic landscape.
The technology first came into the spotlight through bitcoin, a much popular cryptocurrency compared to other cryptocurrencies. But what Bitcoin brought to our attention is the blockchain technology itself.
Blockchain is the brainchild of a mysterious character called Satoshi Nakamoto. As the name suggests, blockchain is a chain of blocks that contains info. Each block is made up of of a number of transactions and each transaction is recorded in the form of a hash. A hash is a unique address assigned to each block during its creation and any further change in the block will lead to a change in its hash.
A block has basically 3 parts:
i.Data/info part- contains the info of the transaction incurred
ii. Hash- Unique ID of the block
iii. Previous Hash- Hash of previous block
Because in a Blockchain, every block has the hash of its previous block, if anyone tries to tamper with the data in some block then the hash of the block will be changed. So he will have to change the hash memory of that block in next and previous block. In doing so, the present hash of the next block will also change. Eventually the intruder will have to change the hashes of every block in the Blockchain which runs into millions or hundreds of millions of blocks. This would require infinite computational power which no single corporation, individual or government would afford in practice. Hence, the data in the Blockchain is tamper proof and maintains its authenticity.
Blockchain technology isn’t just another hype that people forget after a few days. With all its blockchain features and applications, we can safely assume that it’s here to stay.
Data stored in blockchain is immutable and cannot be changed easily as explained above. Also the data is added to the block after it is approved by everyone in the network and thus allowing secure transactions. Those who validate the transactions and add them in block are known as miners.
Blockchain is Decentralized as well as an open ledger. Ledger is the record of the transactions done and because it is visible to everyone, therefore is known as an open ledger. No individual or any organisation is incharge of the transactions. Each and every connection in the blockchain network has a same copy of the ledger. No central authority controls the network as there is in the traditional client-server model.
Blockchain operates in a peer to peer network. This feature of blockchain allows the transactions to involve only two parties: the sender and the receiver. Thus it removes the need of third party authorisation because everyone in the network is able to authorise the transactions.
For instance, if I am sending some money from Kenya to my friend in India through bank, then the bank will be the trusted third party. First it will verify the transaction and then may cut some charges for the transaction. Hence the blockchain comes into sight. It aims at removing trusted third party so as to makes the transaction fast and cheap.
The blockchain technology is gaining fast adoption and improving day by day and has a really bright future. The transparency, trust and tamper proof features have led to many applications of it like bitcoin, ethereum etc. It is key in making business and governmental procedures more secure, efficient and effective.
Blockchain technology isn’t just a backup network for cryptocurrencies, but it offers a lot more.
A deeper look into Blockchain Technology Key Features:
There are some exciting blockchain features but among them “Immutability” is undoubtedly one of the key features of blockchain technology. But why is this technology uncorrupted? Let’s start with a connecting blockchain with immutability.
Immutability means something that can’t be changed or altered. This is one of the top blockchain features that help to ensure that transactions can't be altered by any party in the network. But how does it maintain that way?
Blockchain technology works slightly different than the typical banking system. Instead of relying on a single server, every node on the system has a copy of the digital ledger. To add a transaction every node needs to check its validity. If the majority nodes agree it’s valid, then it’s added to the ledger. This promotes transparency and makes it corruption-proof.
So, without the consent from the majority of nodes, no one can add any transaction blocks to the ledger.
Another fact, that backs up the list of key blockchain features is that, once the transaction blocks get added on the ledger, no one can just go back and change it. Thus, any user on the network won’t be able to edit, delete or update it.
Every year there’s a massive amount of money that gets embezzled or fraudulently transferred in our Government. Many people spend a lot of money to protect their business from any external hacks. However, we always forget to count the internal cybersecurity risks that come from corrupted people and authorities.
In many cases, there’s always an insider involved in fraud and hacking incidences, so in the end, we pay the price for our trust. As you all know banks aren’t that trustable now and the global economy needs a trustless environment to fully overcome this issue.
So, when it comes to a corruption-free environment, you can easily assume that blockchain can definitely change things for better.
If businesses start to integrate blockchain technology to maintain their internal networking system, no one would be able to hack into it or alter or even steal info.
Public blockchains are a perfect example of this. Everyone in the public blockchain can see the transactions, so it is absolutely transparent. On the other hand, private blockchain could be best for enterprises that want to remain transparent among staff and protect their sensitive info along the way from public view.
The network is decentralized meaning it doesn’t have any governing authority or a single person looking after the framework. Rather a group of nodes maintains the network making it decentralized.
This is one of the key features of blockchain technology that works perfectly. Blockchain puts us users in a straightforward position. As the system doesn’t require any governing authority, we can directly access it from the web and store our assets there.
You can store anything starting from cryptocurrencies, important documents, contracts or other valuable digital assets. And with the help of blockchain, you’ll have direct control over them using your private key. So, you see the decentralized structure is giving the common people their power and rights back on their assets.
Less Failure: Everything in the blockchain is fully organized, and as it doesn’t depend on human calculations it’s highly fault-tolerant. Accidental failures of this system are not a usual output.
User Control: With decentralization, users now have control over their properties. They don’t have to rely on any third party to maintain their assets. All of them can do it simultaneously by themselves.
Less Prone to Breakdown: As decentralized is one of the key features of blockchain technology, it can survive any malicious attack. This is because attacking the system is more expensive for hackers and not an easy solution. So, it’s less likely to breakdown.
No Third-Party: Decentralized nature of the technology makes it a system that doesn’t rely on third-party companies; No third-party, no added risk.
Zero Scams: As the system runs on algorithms, there is no chance for people to scam you out of anything. No one can utilize blockchain for their personal gains.
Transparency: The decentralized nature of technology creates a transparent profile of every participant. Every change on the blockchain is viewable and makes it more concrete.
Authentic Nature: This nature of the system makes it a unique kind of system for every kind of person. And hackers will have a hard time cracking it.
As it gets rid of the need for a central authority, no one can just simply change any characteristics of the network for their benefit. Using encryption ensures another layer of security for the system.
But how does it offer so much security compared to already existing techs?
Well, it’s extremely secure because it offers a special disguise – Cryptography.
Added with decentralization, cryptography lays another layer of protection for users. Cryptography is a rather complex mathematical algorithm that acts as a firewall for attacks.
Every info on the blockchain is hashed cryptographically. In simple terms, the info on the network hides the true nature of the data. For this process, any input data gets through a mathematical algorithm that produces a different kind of value, but the length is always fixed.
You could think of it as a unique identification for every data. All the blocks in the ledger come with a unique hash of its own and contain the hash of the previous block. So, changing or trying to alter the data will mean changing all the hash IDs. And that’s kind of impossible.
You’ll have a private key to access the data but will have a public key to make transactions.
Blockchain Security provides premium protection for enterprises.
Hashing is Irreversible!
Hashing is quite complex, and it’s impossible to alter or reverse it. No one can take a public key and come up with a private key. Also, a single change in the input could lead to a completely different ID, so small changes aren’t a luxury in the system.
If someone wants to corrupt the network, he/she would have to alter every data stored on every node in the network. There could be millions and millions of people, where everyone has the same copy of the ledger. Accessing and hacking millions of computers is next to impossible. That’s why it’s so secure. As it’s too hard to bypass, you won’t have to worry about hackers taking all your digital assets from you.
Usually, a public ledger will provide every info about a transaction and the participant to everyone.
That’s because the ledger on the network is maintained collectively by all users on the system. This distributed computational power across the computers supports a blockchain network.
This is the reason it’s considered one of the blockchain essential features. The result will always be a higher efficient ledger system that can compete against the traditional ones.
No Malicious Changes: Distributed ledger responds really well to any suspicious activity or alter. As no one can change the ledger and everything updates real fast, tracking what’s happening in the ledger is quite easy with all these nodes.
Ownership of Verification: Nodes act as verifiers of the ledger. If a user wants to add a new block others would have to verify the transaction and then permit it. This provides the user with fair participation.
No Extra Favors: No one on the network can get any special privilege from the network. Everyone has to go through the usual pre-set protocol and then add their blocks.
Managership: To make the blockchain features work, every active node has to maintain the ledger and participate for validation.
Fast: Removing the intermediaries quickens the system response. Any change in the ledger is updated in seconds!
Every blockchain thrives because of the consensus algorithms. The architecture is brilliantly designed, and consensus algorithms are at the core of this architecture. Every blockchain has a consensus to help the network make decisions.
In simple terms, the consensus is a decision-making process for the group of nodes active on the network. Here, the nodes can come to an agreement quickly and relatively faster. When millions of nodes are validating a transaction, a consensus is absolutely necessary for a system to run smoothly. You could think of it as kind of a voting system, where the majority wins, and the minority has to support it.
The consensus is what replaces trust in the network. Nodes might not trust each other, but they can trust the logical algorithms that run at the core of it.
There are lots of different consensus algorithms for blockchains over the world with each its rules to make decisions. The architecture creates a realm of fairness on the web.
However, to keep the decentralization going every blockchain must have a consensus algorithm, or else the core value of it is lost.
Traditional banking systems are snails. Sometimes it can take days to process a transaction. It also can be corrupted quite easily eg by insider foul play. Blockchain offers a faster settlement compared to traditional banking systems. This way a user transfers money relatively faster, which saves a lot of time in the long run.
These blockchain features make life easier for transactions where parties are far apart geographically. Another fun fact is the smart contract system. This can allow making faster settlements for any kind of contract. This is one of the best benefits of blockchain features to this day. And with the third party out of the way, people can send money with a minimal fee. Mind blowing, right?
This way blockchain is impacting the international trade too.
The blockchain with its exceptional features is impacting companies, individuals and governments world over.
It’s built with all sorts of efficient tech. Although blockchain is giving rise to a lot of controversies, if people can utilize the ideology behind all benefits of blockchain a brighter and shinier future can happen for everyone. Blockchain can change the world.