Blockchain is going to change everything more than the internet has. – Brock Pierce
By far now, if you have stopped here to check this blog post, you must have heard about blockchain technology somewhere or the other, mainly probably for cryptocurrencies like Bitcoin. And also, you might have wondered, ‘’What is blockchain technology?’’
Well, let us answer this question for you in the simplest way possible.
What is Blockchain technology?
Blockchain technology is the underlying technology of all cryptocurrencies; however, the use of blockchain technology is not at all limited to only digital currencies.
Undoubtedly, blockchain technology has the potential to revolutionize the way the financial world operates today. So let us start by understanding what it is?
Blockchain is a type of distributed ledger or database that stores information differently. The primary difference between a blockchain database and a standard database lies in the structure of the information stored.
Like the information in a standard database may be structured in the form of a table for easy searching and filtering purposes, but in blockchain, the information is collected in different groups called ‘blocks.’
These blocks of information chained together to one another are called the ‘blockchain.’ Because the blocks have respective capacities for storage, when one block gets filled, another block is created and chained to the previous block of information through cryptography, creating a chain of information stored in blocks.
The moment the transaction is added to the blockchain, it is synchronized for everyone in the network to see it at the same time, no matter wherever they are around the world.
Main features of blockchain technology
It is impossible to make changes to any one block without making a change in every block in the chain; this feature makes it an incredibly secure way to store transactions.
Also, this infrastructure of storing information creates an irreversible timeline of data. When a new block adds up, it is set in stone and becomes a part of the timeline. It is challenging to return or alter the block’s content. Each block gets an exact timestamp of when it was created.
Moreover, the data gets stored in a decentralized manner and is tamper-proof.
Let us understand how::-
With decentralization as one of the prominent features of this groundbreaking technology, all transactions are secured in a peer-to-peer network of computers, without the control and intervention of any intermediary, third party or centralized authority (a bank, government or a centralized server).
The best way to explain this is the analogy of Google docs, only without Google acting as an intermediary. Google docs are shared with others, and only people who have permission to view the document can see each data entered in real-time.
People using the data only verify the information, and no centralized authority is doing that in the process.
Another feature making blockchain unique is that each block contains the cryptographically secured hash of the previous block, and all blocks are stored in a chronological and linear manner.
The cryptographic hash takes the transaction data from the previous block as an input and converts it into an output of a fixed size.
It is a mathematical function that is nearly impossible to predict, which makes it harder to tamper with the chain and data it contains. Moreover, the blocks do not have serial numbers and are uniquely identified and verified due to hashing.
In addition, blockchain technology is consensus-based, meaning that all nodes (participating computers in a network) must agree that a transaction is valid. A consensus is achieved through consensus algorithms. Lastly, blockchain technology also serves transparency by recording and distributing a ledger of all transactions.
Every year, there are so many conferences around the world held focusing on Blockchain technology and its implementation.
Due to the advanced hashing and cryptographic functions, blockchain offers an utterly secure experience than traditional ways of storing and sharing information or data.
However, the most prevalent use cases of the technology are in cryptocurrencies, as it allows for cryptocurrencies to function.
With its further growth and evolution, experts have now begun to think about new technology applications other than the financial service industry.
Supply Chain Management, Healthcare, Real Estate, Energy and Media are some sectors already exploring different ways the technology can benefit them.
In addition, blockchain technology can also help streamline some public sector requirements like Record Management, Identity Management, Voting systems etc.