What is Blockchain Technology ? If you’ve been following the cryptocurrency news, you’ve undoubtedly heard of blockchain technology. But what exactly is it? Here’s a breakdown of everything you need to know about this revolutionary technology and how it can impact your business.
- 1 What is Blockchain Technology ?
- 2 Blockchain as a database
- 3 How does blockchain ensure trust ?
- 4 How does blockchain improve transaction processing ?
- 5 Cryptocurrencies and how they are related to blockchain
- 6 Who uses blockchain technology ?
- 7 Are there any real world examples of blockchain in action today ?
- 8 How is blockchain being used by government and the private sector today ?
- 9 The future of blockchain tech
- 10 Conclusion
What is Blockchain Technology ?
A blockchain is a decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
Blockchain as a database
A blockchain is a decentralized and distributed digital ledger that records transactions across many computers so that the record cannot be altered retroactively without changing all subsequent blocks and therefore all subsequent entries.
This allows the participants to verify and audit transactions inexpensively. The benefit of a blockchain database is trust, because there’s no centralized version of information that can be corrupted or hacked. The blockchain lets two parties confidently conduct a transaction online without needing any trusted third party to oversee it. There are multiple different blockchains, but they all have one thing in common: each is a shared public ledger used for recording ownership and transaction activity.
All confirmed transactions are included in new blocks on the chain, making them nearly impossible to tamper with after the fact. Every node—computer connected to bitcoin network using a client that performs tasks requested by users—on bitcoin network has its own copy of blockchain, which means that there are thousands, if not millions of copies of same blockchain data floating around on internet.
How does blockchain ensure trust ?
One of blockchain’s biggest strengths is its decentralized nature, meaning information isn’t housed in one central location but instead distributed across every computer that uses it. That makes hacking almost impossible and keeps transactions private, among other benefits. This also means there needs to be a way to prevent users from spending cryptocurrency more than once—and that requires trust. How does blockchain ensure trust? That comes down to some fancy cryptography.
When you send someone cryptocurrency on a blockchain network, you’re sending an encrypted set of data that only they can decrypt using a unique key. But if your key gets stolen or compromised, then anyone can use your money. To solve for that problem, each block on a blockchain network contains multiple keys (usually two), which act as backups in case one gets lost or stolen.
If any transaction occurs with a key that doesn’t match up with others on the chain, it will get rejected by everyone else on the network. This process ensures that no single person can spend another user’s cryptocurrency without permission. It all sounds very complicated, but blockchain technology really boils down to three things: public/private keys, encryption and decentralization. The rest is just details.
How does blockchain improve transaction processing ?
When executed properly, a blockchain-based transaction can be more secure and efficient than any traditional way of processing payments. Here’s why: To make changes to an existing block in a blockchain, you need to have access to 51% of computing power (known as mining) that’s associated with that particular blockchain. This can result in slower transaction speeds—or worse, it could stop transactions from happening entirely.
In other words, if one entity has control over more than half of all available mining power, they could potentially hold up or reverse transactions. And since there are thousands of different blockchains out there, it’s possible for these entities to collude and take control over multiple chains at once. That said, there are new methods being developed that aim to address these issues by changing how data is stored on a blockchain so only authorized parties can make changes or additions to a chain.
Read This : What is Bitcoin ?
Cryptocurrencies are a subset of digital currencies, and digital currencies themselves are part of a larger category called cryptocurrencies. The term cryptocurrency was first coined in 2009, but they have been used in certain online communities since as early as 1998. Bitcoins are by far the most well-known cryptocurrency out there, with other major cryptocurrencies including Ethereum and Litecoin. You may have heard some or all of these words before, but you might not be sure what each means exactly.
Who uses blockchain technology ?
The types of companies that use blockchain technology are shifting. Initially, financial services firms and tech giants led adoption, but now it’s starting to spread out. The International Data Corporation predicts that blockchain will add $3.1 trillion in business value by 2025. By contrast, Goldman Sachs says that blockchain could reduce banks’ infrastructure costs related to cross-border payments, securities trading and regulatory compliance by $15 billion per year. Businesses outside of finance and tech are also considering implementing blockchain technology.
Are there any real world examples of blockchain in action today ?
Yes, several. Many large businesses are experimenting with blockchain technology as a way to streamline and secure their data. For example, Walmart and IBM are using blockchain technology to track food deliveries. The big takeaway from all of these projects: in order for blockchain technology to work, everyone involved has to use it. If your business doesn’t embrace blockchain now, you might find yourself at a disadvantage in months or years.
How is blockchain being used by government and the private sector today ?
Blockchain technology is helping governments and businesses alike improve their efficiency, transparency, and security. Already, large banks have started experimenting with blockchain technology to make cross-border payments faster and more secure. Meanwhile, countries like Estonia are using it to build digital identity tools for their citizens. By providing a secure record of access that lives online and isn’t controlled by any one entity, blockchain has enormous potential in government—and could even help fight voter fraud.
Read This : What is Cryptocurrency ?
The future of blockchain tech
The blockchain is poised to transform business. Not just how businesses operate, but more importantly, how they define value. The distributed ledger that underpins blockchain provides a way to construct systems of trust and ownership in which disparate parties can agree on what something is worth and how it works. This potentially makes it possible for unrelated companies to create entire markets without centralized oversight or control — for example, distributed energy markets that allow neighbors to share solar power directly with one another, cutting out utilities entirely. In addition, blockchain technology offers an opportunity to redefine how we think about value itself.
In our current economic system, we rely on intermediaries like banks and governments to verify transactions between individuals and organizations—and ultimately determine what something is worth. But with blockchain technology, we can eliminate these middlemen by building trust into our transactions from day one.
A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (computer connected to the network) gets a copy of the blockchain, which is downloaded automatically. Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits.
Anybody can set up a node that replicates the necessary data for all nodes to reach an agreement and be compensated by users and app developers. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on Earth with an internet connection.