What is Blockchain technology?
These days most of the researchers and technologists are talking about this Blockchain technology that came as a big thing in front of many industries from financial to retail to even healthcare. So let’s have a look to it. Blockchain is the technology behind cryptocurrencies such as Bitcoin. But digital cash and Bitcoin are facing problems called Double-Spending.
Let’s understand this with an example- When I email you a picture of my dog, which means I am sending you a copy and not original picture. However, when I think of sending money to you online, then it is bad idea if I send you a copy of it. There was always a risk with the Bitcoin that the holder could send copies of the same Bitcoin in various different transactions which ultimately leads to what called double spending. That is why this technology is used in order to counter issues like double spending.
When a transaction occurs between two users who do belongs to same network then it is stored in a secure, verifiable and permanent public register called Blockchain. Inside cryptographic books, the data relating to exchanges are saved which are connected in a hierarchical manner to each other. Thus, this creates a chain of data blocks which are endless hence called Blockchain and it also allows you to trace and verify all the transactions you have ever made. To certify the transactions between people is the primary function of the Blockchain.
The term is used to verify the exchange of cryptocurrency between two users in the case of Bitcoin as it is the only one of many possible uses of this technology structure. In many other sectors, Blockchain can be used to certify the exchange of shares and stocks. One of the great advantages that it offers is the high degree of security and for which it provides a guarantee as well. In fact, within one of the chain blocks, when a transaction is certified and saved, then it will be no longer modified or tampered with. A pointer is that which connects each block to the previous block called timestamp which certifies the time at which the transaction actually took place.
What is the definition of Blockchain?
The technology is a distributed ledger database behind Bitcoin and various others cryptocurrencies for recording transactions which are commonly known as Blocks.
“An economic transaction’s incorruptible digital ledger which is used to programmed for recording not only financial transactions but it includes everything”.
Blockchain is a kind of distributed ledger in order to maintain a permanent and tamper-proof record of transactional data. The term is managed by computers belonging to a peer-to-peer network and it also functions as a decentralized database. In the distributed network, each of the computers maintains a copy of the ledger in order to prevent a single point of failure and all copies are updated and validated simultaneously.
“A way for transferring a digital property from one internet user to another user, such that the transfer is guaranteed to be safe and everyone knows that the transfer has taken place and the legitimacy of the transfer cannot be challenged by anyone.”- Marc Andreessen.
Being a secure and cost-effective way to create and manage a distributed database, Blockchain applications are used in many industries and are also being explored. It also maintains records for digital transactions of all types. A distributed ledger technology is offered which provides a transparent means for verifying and tracking the ownership as well as the transfer of assets. Users are enabled enough to share their ledger of transactions. Along with it, bitcoin’s future will transform the financial system as well.
How does Blockchain technology work?
There are three principal technologies that together create a Blockchain. And the technologies are-
1. Private key cryptography.
2. A distributed network with a shared ledger.
3. And the last, an incentive to service the network’s transactions, record-keeping and security as well. So here is the explanation of how these three technologies work together in order to secure digital relationships.
4. Cryptographic keys Over to the internet, two people wish to transact with each other. Each of them holds a public key as well as a private key.
To create a secure digital identity reference is the main purpose of this component of this technology. Identity is based on a combination of public and private cryptographic keys which are possessed. These keys together create an extremely useful digital signature. In turn, a strong control of ownership is provided by this digital signature.
To secure digital relationship, strong control of ownership is not enough. These secure digital transactions must be combined with a means of authorizations as well as approving transactions while the authentication is solved. For Blockchains, it starts with a distributed network.
A distributed Network
Let us understand the benefits and need for a distributed network through experiment- ‘ if a tree falls in the forest’. If the cameras record the falling of treesin the forest, then we can be pretty certain that the three fell. If the visual evidence is unclear, we have the particulars as evidence. Same is with Blockchain, much of the value of its bitcoin is what called large networks where various validators such as cameras which are reached a consensus and they witnessed the same thing at the same time. But they use mathematical verification instead of cameras. In short, in order to secure network what is matter is the size of the network. That is one of the most attractive qualities of this future technology as it is quite large and possessed so much computing power.
System of record
A super useful form of digital interactions emerges, when this network is combined with the cryptographic keys. The process starts with A taking their private key which are making some sort of in announcements in the case of bitcoin, which you are sending a sum of cryptographic currency and will attach it to B’s public key.
Then what is broadcast to all nodes in the network is a block which contains a digital signature, timestamp and relevant information.
Network serving protocol
Now you can light challenge the experiment of falling a tree in a forest with the following question that why would there be a millions of computers along with cameras waiting for recording whether a tree fell? In short, in case of Blockchain to make it secure, how do you attract computing power to service the network? This involves mining for public Blockchains.
There is a reward available for one of the computers by offering your computer processing power to service the network. To help service the public need, a person’s self interest is being used. Bitcoin must be unique and have some value and in order to achieve this, the nodes create and maintain transactions for each bitcoin which are serving the network.
They basically express the agreement about new blocks or rejecting invalid blocks and also vote with their CPU power. They add a new block to the chain when a majority of the miners arrive at the same solution. This block can also contain data or messages, hence is time stamped
Here’s the chain of blocks
For each Blockchain, the type, verification, and amount can be different. Also, the process of verification can be tailored as well. When enough nodes arrive at a consensus on how ought to be verified, rules and incentives can be created if needed.
What would be the impact of Blockchain technology?
Social web, big data, the cloud, robotics, or even artificial intelligence are some of the technologies which are not going to change the next decade of business, but it is the Blockchain. The idea behind it is simple as we have already understand what is Blockchain technology?.
There are some of the areas which will experience a profound impact-
1. Solving the problem of IP in a digital age – Earlier, many creators of intellectual property were not properly compensated. Various inventors now have to deal with digital piracy that became possible on the web. For creators of intellectual property a new platform is provided by the Blockchain technology in order to get the value they create. The intellectual property world’s equivalent of the double spend problem is solved by the technology better than existing digital rights management system.
2. Creating a better sharing economy – Sharing economy companies combines various services and the supplier are willing to sell their capacity through a centralized platform. They again resell them to users. The technology provides a means to suppliers for collaborating in order to deliver a great share of the value to them
3. Changing enterprise collaboration – Today, inside the organization’s collaborations tools are changing the nature of knowledge work and management. Various limitations create an opportunity for the Blockchain-based system. For example- employees and companies would be now able to keep their data if every employee had their own elaborate profile which they owned and controlled. Rather than giving it to large social network companies, they are able to keep their data.
What are the industries influenced by the Blockchain technology?
Technologies can influence various industries and change the way how the business is done. As new technologies came into force, they affect them and are forced as well to adopt the technology.
Here are some prominent industries that are influenced by Blockchain technology –
1. The Banking Industry – Various significant problems faced by the banking industry is now can be solved by the Blockchain technology as it has the potential to do so. Banks these days handle the transfer of the money and also stores money for their customers. But with this technology, a transaction that takes place in the banking sector is permanently recorded with their secure system.
2. The Real Estate Industry – Blockchain technology is now able to change completely the current headache of paperwork which is involved in each transaction of real estate. Through it, all the transactions can be stored securely with less cost as well as less work. The deed coin which is used in real estate industry is looking to change with the future of cryptocurrency.
3. The Healthcare industry – When it comes to sharing and storing medical data and records in the healthcare industry, Blockchain will provide great disruption. The records which can be accurately and safely transferred to and accessed by the doctors are securely stored by this technology.
4. The legal industry – By verifying and storing data, the technology will also provide help in some areas of the legal industry. With it, you can also make changes to the documents and then they will be authenticated and stored as well. Legal issues can also be eliminated which are dealing with inheritance.with inheritance.
5. Politics – In politics, it takes care of voter registration and verification of identity. To ensure that only legitimate votes are counted, it would count the votes as well. The days of recounting votes and voting day drama are gone with this technology..
6. The education industry – An emerging version of the internet is utilized by the education industry which combines Blockchain, virtual reality, and cryptocurrency as well. The new 3D INTERNET has the power to create a global classroom which is like a miracle for the people like never before. The technology transforms this industry from the way it has been for many years.
What is the benefit of Blockchain technology for professionals and Common Man?
Blockchain offers many advantages and so much to the professionals. Here are some examples-
1. Efficiency in supply chain management – For any business, In order to access to growth opportunities and to ensure healthy bottom line, efficiency is the key. That is why supply chain management usage of this technology can help to solve many of the issues of big and small businesses.
2. Better business processes – The basic fundamental function of the technology is to ensure that data is exchanged and stored carefully in a transparent fashion. Smart contracts are another promising area of this technology. These are self-executing contracts which can be used for lease agreements, sale contracts, employment contracts and so on.
3. Tokenization of assets – Today is the time of business practice which is tokenization of assets with the use of Blockchain technology. Through tokenization, businesses can easily manage the assets which they own. Along with it, they can also sell and resell it without the lengthy, expensive and time-consuming process of liquidation of assets in the market. With the tokenization, businesses can easily place a value on intangible assets, like intellectual property. The other assets with similar values can also be fungible by them as well.
Blockchain in Taxi: New technology for common people
The only constant of evolution which has gone for centuries is the Blockchain technology in the local transport or taxi. In transport service and industrial administration as well, people are looking for more efficient technologies. Taxis are in high demand these days because of the importance of passengers in everyday’s life. That is why local taxi industry has proven to be of great importance in major town and cities around the world. For example- If you are traveling to a different city and you require a taxi which drops you from taxi to other places or vice-versa. This is because of benefits which it offers to you.
Many taxi services are based on tokenization and Blockchain. The technology provides regular people with greater control over their resources. The implementation of this technology enables the transparent industry. Now anyone with the Blockchain token has full control of all the benefits associated with these tokens.
Can Blockchain technology help poor people around the world? Well, the answer is yes and here is the proof –
1. Insurance – Most people generally people lack health and life insurance because it is quite expensive as compared to the income for them. And many people doesn’t afford any insurance because they just live on less than one dollar a day. But because Blockchain systems are online and also consists verification of transactions, they can cut the costs for insurers for sure. Now customers can pay small amount for their insurance with verification as well.
2. Helping small business – The small businesses are often short of cash and even borrow money sometimes. Generally, they depend on banks for lending money but they too aren’t willing to do it because of fraudulent invoices or bad records. In all these concerns, Blockchain system helps as all these records must be authenticated before being added to the books.
3. Sending money internationally – Various emigrants who are working abroad are unable to send the money to their home countries because the process of sending money is extremely expensive for them. But the technology helps in this area as well by reducing the transaction costs of the money.
The Blockchain is using new technologies in order to build a better financial system. In the context of bitcoin, it is useful to understand the technology. You should not assume that the bitcoin mechanisms such as proof of work, longer chain rule etc are not necessarily required by all Blockchain ecosystems. For maintaining a decentralized, public ledger with no formal control and governance, bitcoin is the first attempt. There are various important challenges involved.
Talking about the other perspectives, other problems can be solved by private distributed ledgers and Blockchains. You need to individually consider advantages and disadvantages of each solution for each individual case.