Everything you need to know about BlockChain
What is Blockchain?
Blockchain is a decentralized technology. It is a database that stores encrypted blocks of data. These blocks of data cannot be changed or hacked by any means. It is used to record transactions using DLT (Distributed Ledger Technology). DLT is a technology where data is spread across multiple sites and is not centralized. As the name of DLT suggests, a ledger is distributed between different systems and not stored or controlled by any centralized system. In this ledger, every transaction is approved by the owner using the digital signature, which makes blockchain very secure and way more difficult to hack. As blockchain is decentralized, it allows the public to get full real-time access and transparency but no one can change it.
A brief History about Blockchain:
Satoshi Nakamoto is considered as the brain behind the blockchain technology, as they worked on bitcoin, which was the first application of blockchain technology. It happened in 2008. But, it was envisioned more than a decade before in 1991. Stuart Gaber and W. Scott Stornetta came up with the idea of blockchain. Their first work was on a cryptographically secured chain of blocks that no one could edit or change. Since then many computer scientists came up with the idea of the implementation of blockchain.
How Does Blockchain Work?
Blockchain is basically a new cool way of making transactions that are decentralized, no one has control over it and no one can modify any transaction by any means these transactions are public but no one can trace those who are making these transactions. The whole concept of blockchain is making transactions. First of all, a transaction is created, then a block that represents this transaction is also created. Now, this block is sent to every node in the network. What are nodes? Nodes share and store the blockchain data. Once the block is sent to all nodes, nodes validate the transaction. Now, this block is added to the existing blockchain and the transaction is completed. This is how blockchain works.
Types of Blockchain:
There are four types of blockchain. Public Blockchain, Private Blockchain, Hybrid Blockchain, and Consortium Blockchain. Before getting into these, let’s understand why we need different types of blockchains. There are many different applications that are based on blockchain technology. For example, Bitcoin is the public blockchain because it has to be decentralized, which means no one can control it. Just like this, there are different applications that are being controlled by single authorities for example R3 Corda and Hyperledger. These both are applications of private blockchain technology. This is why there are different types of blockchain.
Public Blockchain
A public blockchain is a permission-less and transparent type of blockchain. Everyone can access this blockchain platform. There are no such restrictions to get access to the public blockchain, anyone can make transactions in this domain. These transactions are verified using the Proof-of-Work system. This is very secure, no one can modify it and the best examples of Public Blockchain are Bitcoin, Ethereum, and many other coins which are decentralized.
Private Blockchain
A private blockchain is the direct opposite of a public blockchain. It is a permission-based blockchain that is controlled by any authority. It is also a restrictive blockchain. As private blockchain is controlled by one entity, it is fast as compared to the public blockchain but this is not as secure as a public blockchain.
Hybrid Blockchain
It is kind of a combination of the public blockchain and private blockchain. It is used by organizations where they need to deploy both public and private blockchain. Organizations can bend this blockchain according to their needs. Hybrid blockchain is not completely transparent.
Consortium Blockchain
This blockchain is managed by more than one organization which means it is not fully decentralized. More than one organization exchanges information on this type of blockchain. A consortium blockchain is more secure and less transparent. Banks and research organizations use consortium blockchain technology.
Advantages and Disadvantages of Blockchain:
A blockchain is a new form of technology to save and secure your digital assets. Although it does have advantages and disadvantages.
Advantages:
Secure and Fast
Blockchain technology is very fast and very secure. Transactions are very fast. If we compare transaction speed in blockchain and bank payment systems, a transaction made to a person with a different bank account takes time. While transactions in blockchain are fast. No one can do fraud, as transactions are transparent and no one can change any information in it, this makes blockchain secure too.
Higher Efficiency
There is no third party involved in any transaction as it is a peer-to-peer network. This makes it more efficient as there is no room for human error, mistakes. It is not controlled by any central entity and is based on DLT, that’s why it results in higher efficiency.
Transparency
Every transaction is available for public access. Anyone who has access to the internet can view transactions and can make transactions. Although cannot modify or change any transaction.
Disadvantages:
Private Keys
It is almost impossible to recover private keys. Private keys are similar to passwords but lengthy and a bit more difficult than passwords. The private key is assigned to make secure transactions and to keep your data secure. No one can hack these private keys but if you lost your private key, it is almost impossible to recover them and you may end up losing all your digital assets.
Storage
With the increase in the number of users, the number of transactions is also increasing and with this digital assets are also increasing more space is required for servers, which means more hard disk and also more physical space.
Electricity Consumption
An increase in the number of users, transactions means more miners. Mining consumes a lot of electricity and with the increase in the number of miners. Electricity consumption is going to be very high.
Where can Blockchain be used?
Being the fastest and most secure way of making transactions, there are many use cases where blockchain is being used.
Buying Cryptocurrency
Cryptocurrency has become very popular in the last decade. People are buying and selling coins using different crypto wallets. These wallets are obviously based on blockchain networks. Transactions of selling and buying coins are very fast and secure. No one can hack these wallets.
Smart Contracts
Smart contracts are just like regular contracts, they are as simple as regular contracts but regular contracts are based on third-party involvement and traditional agreement. Smart contracts are based on blockchain networks. No third party is involved. This makes it faster and more secure.
Internet of things
Many companies are implying blockchain technology in their smart products. Smart appliances companies are using blockchain technology in which they are storing the collected data from the devices which makes it very difficult to tamper with the data.
Digital Identity
IDs based on blockchain networks can make personal data very secure for citizens. Blockchain-based digital identification systems will be much more secure, impossible to hack, impossible to tamper with data.
Healthcare Department
Blockchain network is bringing a revolution in the healthcare department. It is important to save medical data. As blockchain is secure, decentralized patients’ data is becoming more secure and easy to access. It also provides the facility to log all data of patients with transparency.
NFT Market Places
NFT marketplaces give you the facility to buy and sell NFTs. All transactions of buying and selling NFTs are based on blockchain networks. This makes these transactions very fast and secure.
There are many other use cases where blockchain is being used. It is saving time and making things more secure and reliable.
Future of Blockchain
Blockchain is already being implemented in many different industries. It is bringing a revolutionary change in life. It is not only making life easy but also making day-to-day tasks very secure and more efficient. It will be easy to treat health problems as digital identities and patient data will be more secure and available easily. It will be easier to buy assets in real life. It takes many days if you are going to buy a new house, and with the third party involved the cost gets high and the whole procedure is very slow. But, blockchain technology will eliminate third-party involvement and also make transactions more secure. Blockchain technology can also be implemented in voting systems. It will help to protect voter identity and can make it more private. No one could know which voter voted for what party. This can make the voting system secure. With the help of blockchain technology, remote voting systems can also be implemented, there will be no need to go to the voting polls anymore. Cryptocurrency is a big part of blockchain technology. The adoption of cryptocurrency can turn the table around. Cryptocurrency becoming a payment gateway will allow for more secure and fast transactions. There is a huge potential for blockchain technology. As it is more secure, more time-saving, efficient, and reliable.
