Do you want to know about blockchain technology, how it works, and the use of the technology in different sectors? Here is the detailed information.
What is blockchain?
Blockchain is the chain of many blocks. Here block means records. The blockchain contains all the records in the form of blocks on a chain basis.
In simple words, a Blockchain is a digital ledger that contains all the records of transactions using the cryptography method. The cryptography method is a mathematical technique and secure communication that prevents third-party interaction.
A blockchain is a decentralized, distributed and public digital ledger used to record transactions across multiple computers. This is so that no block can be changed without changing all subsequent blocks.
What is a decentralised ledger?
Decentralized means that it is controlled by several offices or authorities rather than one. Blockchain is also a decentralized digital ledger that is controlled by not one computer but many computers. Here every computer is called a node.
What is a distributed ledger?
Distributed means to distribute among many or not with anyone. Blockchain is also a distributed digital ledger whose authority will not be with one computer but with many computers.
How does blockchain technology work?
If a transaction occurs in the blockchain, a new block is created automatically to record this transaction and store all the data. Along with the transaction data, this block also stores the hash of previous data and timestamp.
What is Hash in Blockchain?
Hash is a unique reference number of a block. When transaction data is stored in a block, then it creates a hash. When a new transaction data creates a new block, it saves the hash of the previous block along with the transaction data. If someone tries to change the data of a block, then its hash will also change.
What is Timestamp in Blockchain?
Timestamping is the process of safely keeping track of the creation and modification times of a document or transaction. Once it is recorded, no person, not even the owner of the document, should be able to change it.
How much secure the blockchain is?
The blocks located in the blockchain store transaction data as well as hashes and timestamps. As we mentioned earlier, the hash is a unique reference number that represents the data stored in the block. And the timestamp shows the creation or modification time of the block.
When someone tries to change the data of a block, its hash also changes, as well as the hash of the next block, also changes. Similarly, the hash changes in every block in the blockchain, and the data becomes invalid.
Therefore it becomes necessary to change the data of every block, which is impossible. There are many blocks in the blockchain that will take many years to change. Therefore the data in the blockchain is secure.
What are the various types of blockchain?
There are four types of blockchain.
- Public blockchain
- Private blockchain
- Consortium blockchains
- Hybrid blockchains
1. Public blockchain
There are no restrictions for anyone in a public blockchain. Anyone who has an internet connection can participate and make transactions on this blockchain.
- The example of such public blockchains are the bitcoin blockchain and the Ethereum blockchain.
- Such networks are beneficial to those who have authority over it.
- There is no privacy for transactions
- The security level is weak.
2. Private blockchain
A private blockchain is like a public blockchain but it is controlled by a designated administrator. If someone wants to join such a blockchain, they can join only after the permission of the administrator. In this blockchain, there is a restriction on anyone’s access. If the administrator wants, he can give access to anyone.
- The example of such blockchains are Hyperledger Fabric, Multichain, Hyperledger Sawtooth, and Corda.
3. Consortium blockchains
A consortium blockchain is used for businesses or organizations where different permissions are given to different people. Everyone performs their responsibilities according to permission. The Consortium Blockchain is governed by a group of organizations rather than a single entity.
- The example of such blockchains are IBM Food Trust, Marco Polo, and Energy Web Foundation.
4. Hybrid blockchains
Hybrid blockchains have a combination of centralized and decentralized features. It is used by those who work in a closed ecosystem without making everything public.
- The example of such blockchains are Dragonchaina and XinFin’s Hybrid blockchain.
History of Blockchain
- David Chaum first proposed a blockchain-like protocol in 1982.
- In 1991, Stuart Haber and W. Scott Stornetta referred to the blockchain in cryptography and they wanted to create a system in which document timestamps could not be tampered with.
- Satoshi Nakamoto is recognized as the mind behind blockchain technology. It is not yet known whether Satoshi Nakamoto is an individual or a group of people.
- Nakamoto invented bitcoin, the first application of digital ledger technology in 2008.
- They released the first whitepaper about the technology in 2009. In this, he detailed how the technology would be used to increase digital trust, given the decentralization aspect, which meant that no one would ever be in control of anything.
Use of Blockchain technology
Blockchain technology is being used by many big companies and will be used in multiple. To know about its use, see the information given below.
1. Businesses
In industries around the world, blockchain is helping to transform their business. Some industries are testing this technique to measure their organizational efficiency. But many companies are already using blockchain to improve their efficiency, build trust, rapidly shape their business.
For example
- IBM has built the IBM Food Trust on its own blockchain and is being used by many industries.
- Walmart is using the distributed-ledger technology of blockchain to create an automated system for managing invoices, payments, to its third-party freight carriers.
2. Cryptocurrencies
Right now every transaction of cryptocurrencies like Bitcoin and Ethereum is being recorded on the digital ledger of the blockchain. And whatever cryptocurrencies will be launched in the future, all will be on Blockchain technology.
3. Smart contracts
A smart contract is a coding form of contract. Generally, an agreement is required for any transaction to take place. Blockchain will also have such agreements but it will not be in a paper, it will be in a coding form. If any transaction is to be done in the blockchain, then as soon as an agreement is completed in the smart contract, then the transaction will be done automatically. There will be no third-party interaction in the smart contract.
4. Financial services
Blockchain digital ledger will be more useful in the field of banking and finance. With the help of blockchain, banks will send and receive payments faster and more securely.
5. Games
Many video games have been monetized using cryptocurrencies and NFTs. Such as purchasing character skins or other in-game items to customize the game.
6. Healthcare Services
Healthcare providers can use blockchain technology to securely store the medical records of their patients. When a medical record is created, it will be stored in the blockchain. This will be useful for patients, assuring them that their records cannot be changed and are secure in the blockchain.
7. Other use
In addition, blockchain can be used in many fields such as real estate to records property data, voting to prevent frauds, supply chain, domain names, insurance companies.
I hope this article will helpful for you. You can also read other articles.
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