Blockchain Technology
Blockchain is a decentralized ledger of everybody across a
peer to peer network. Using these technology participants can perform
a transaction without the need of a central certifying authority; some of
the potential application includes fund transfer, settling trades and voting
and many others. By allowing the distribution of information and not copying,
the blockchain technology created the backbone of a new type of internet. This
article will unfold various aspect of blockchain technology and what are the
properties that make it so unique.
History of Blockchain Technology
This blockchain comprises
of three technologies, first is the internet which connects many networks, next
is individual cryptographic principles which involved the conversion of
information into code and lastly protocols for control. The first work takes us
back to 1991 when a secured chain of blocks was described in 1991 by Stuart
Haber and W. Scott Stornetta. They wanted to implement a system where document
timestamps could not be tampered with. In 1992, Bayer, Haber and Stornetta
incorporated Merkle trees to the design, which improved its efficiency by
allowing several document certificates to be collected into one block. The
first blockchain was conceptualized by a person known as Satoshi
Nakamoto in 2008. Nakamoto improved the design in an important way using
a Hash cash-like method to timestamp blocks without requiring them to be
signed by a trusted party and introducing a difficulty parameter to stabilize
rate with which blocks are added to the chain. The design was implemented the
following year by Nakamoto as a core component of the
cryptocurrency Bitcoin, where it serves as the public ledger for
all transactions on the network.
How the Blockchain Technology Works
When people do transaction via a medium such as a
bank, e-wallet or any other third party application, there is a chance of
failed the transaction, these can occur due to much reason such as the technical issue, exceeded the limit if the account gets hacked, additional
charges associated with the transaction. The blockchain technology rules out
the dependency on the third party when it comes to the transaction between
two individuals when a user request for a transaction a block representing the transaction is created. The block is then broadcasted to all the nodes of the
network, all the nodes validate the block and the transaction, this block is
then added to the chain, in the final step the transaction gets verified and executed. The blockchain network has no central authority; it is the very
definition of a democratized system. Since it is a shared and immutable ledger,
the information in it is shared and immutable ledger, the information in it is
open for everyone and everyone to see. Hence, anything that is built on the
blockchain is by its very nature transparent and everyone involved is
accountable for their actions. To sum up, blockchain has gained so much
popularity due to
- There is no entity at the centre
- The concepts of chronological storage exist for data.
- No one can alter the data inside the blockchain
- One can keep track of all the data if they want
Three Pillars of Blockchain Technology
There are three pillars of Blockchain Technology which has
been responsible for the worldwide recognition of blockchain technology. Those
are as follows
Decentralization
We have been very used to
the centralized system, in this system, there is a body that stores
everybody’s data, and if any person wants to interact with another he has to go
through the trouble of contacting the body at the centre. Then he is connected
to another person, the most common example can be banks and e-wallets,
they store all your money and every time you have to make a payment you go to
the bank and only then the transaction is completed. You might appreciate the
management of the banks but there are still vulnerabilities.
- As they are centralized all the data is stored at one the point, it also acts as a bait for a potential hacker.
- If the centre is shut down for whatever reason then nobody can access the information.
- If the system at the centre gets updated then it becomes essential for all the nodes to be updated.
However in a decentralized system, the information is not
stored by one entity but everyone in the network owns the information, there is
no fear of data getting corrupted, stolen or hacked because each user has a
copy of ledger and blocks which are encrypted with a complex algorithm. If you
want to interact with someone, you can interact directly without any
third-party app.
Transparency
It can be the most confusing thing
in blockchain to understand, most of the people might think that if everyone
can access all the information then the privacy is completely lost but this is
not the truth. There is a concept of private and public address in the blockchain;
every person has a private address which has to be kept secret (like a password)
and public address (like email) which
can be seen by anyone. The public address is a combination of alphabets and the number and is displayed as“1MF1bhsFLkbzzzz9vpFVevpwmT2Tbyc2dfRs sent 1 BTC” So, while the person’s real
identity is secure you can still see all the transaction that was done by
public address. This level of transparency has never existed before in a
financial system.
Immutability
In an ordinary system, the security is a major concern because in banks there is a centralized system and any potential hacker can hack the main entity. So what makes blockchain better than the banks? In the blockchain, there is no central entity so there is no main target. To alter the data that is already present in the block is very difficult; the blocks are connected as a chain so everybody has data. Even if an attempt is made to alter then the complex algorithms stop all the malicious attempts. Blockchain actually allows the individual transaction to have their own proof of validity and the authorization to enforce those constraints. This makes blockchain a particularly more secure technology.
Application of Blockchain
Trade Processing and Settlement
Traditional trade processes can be expensive and risky,
particularly when it comes to cross-border transactions. Each party in the
process keeps its own records which create significant inefficiencies and there
can be much error. By using blockchain technology we can reduce the
chances to nil because no alteration can be done and the data is
encrypted.
Cross-Border Payments
The global payments sector is error-prone, costly, and open to money
laundering. The blockchain is already providing solutions with remittance
companies such as Abra, Align Commerce and Bitspark that offer
end-to-end blockchain-powered remittance services.
Smart Appliances
A smart appliance is
a device that connects to the internet and gives you more information and control
than before. For instance, a code connected to your appliance can be linked to
the internet and alert you when your cookies are ready or if your laundry has
stopped. These alerts keep your appliances in good condition, they save you
money regarding energy efficiency and help you control your devices when away
from home, among other benefits. Encrypting these appliances on the blockchain
protects your ownership and enables transferability.Blockchain Healthcare
Personal health records could be encoded and
stored on the blockchain with a private key which would grant access only to
specific individuals. Receipts of surgeries could be stored on a blockchain and
automatically sent to insurance providers as proof-of-delivery. The ledger,
too, could be used for general health care management, such as supervising
drugs, regulation compliance, testing results, and managing healthcare
supplies.
Blockchain music
Key problems in the music industry include ownership rights, royalty
distribution, and transparency. The digital music industry focuses on
monetizing productions, while ownership rights are often overlooked. The
blockchain and smart contracts technology can circuit this problem by creating
a comprehensive and accurate decentralized database of music rights. At the
same time, the ledger and provide transparent transmission of artist royalties
and real-time distributions to all involved with the labels. Players would be
paid with digital currency according to the specified terms of the contract.
Blockchain Identity
Whether
we like it or not, online companies know all about us. Some companies whom we
purchase from sell our identity details to advertisers who send you their ads.
The blockchain blocks this by creating a protected data point where you encrypt
only the information that you want relevant people to know at certain times.
Blockchain Government
According to computer scientists, hackers can
rig the electronic system to manipulate votes. The ledger would prevent this
since votes become encrypted. Private individuals can confirm that their votes
were counted and confirm who they voted for. The system saves money, by the
way, for the government, too. The blockchain ledger, also, provides a platform
for what we call “responsive, open data.”
Blockchain technology could be quite complementary in a possibility
space for the future world that includes both centralized and decentralized
models. Like any new technology, the blockchain is an idea that initially
disrupts, and over time it could promote the development of a larger ecosystem
that includes both the old way and the new innovation.
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