A Blockchain is a publicly accessible distributed database storing information electronically used by computing networks. Blockchains are well known for playing a crucial role in cryptocurrency systems like Bitcoin by maintaining a secure and decentralised record of transactions. By guaranteeing the confidentiality and correctness of a data record, a blockchain fosters confidence without the need for a trustworthy third party.
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Now you must be wondering how is Blockchain different from any other database.
A regular database and a blockchain use different organisational data methods. Data is collected by the blockchain in blocks. When full, blocks are sealed and linked to the block that came before them to form the data chain known as the Blockchain. Blocks have particular storage capacities. A new block is formed by the information gathered and then gets added to the loop or chain.
Is Blockchain Secure?
It is absolutely normal for human psychology not to readily trust these technological advancements. But Blockchain has gained trust due to various reasons. But the primary reason is that new blocks are always kept in a linear, chronological order. In other words, they are constantly added to the Blockchain’s “end.” Therefore, it is very difficult to change a block’s contents once it has been added to the Blockchain.
This can be explained in this way that it is due to the fact that each block has its own data as well as the data of the block that came before it and the date mentioned earlier. A code called hash code is created by a mathematical function i.e conversion of digital information into a thread of letters and numbers. If that data is changed in any manner, the hash code also changes.
How are Blockchains Used?
Blocks are used to store information about the monetary transactions of cryptos. Several thousands of additional cryptocurrency systems are currently active on the Blockchain. It turns out that utilising a blockchain to keep track of other kinds of transactions is also a secure approach. Some reputed global organisations have already incorporated the same in their business model.
If you are wondering why so, here is an answer for you –
Blockchain allows all these companies to trace their entire business functionality. It identifies any existing problem and gives enough scope to rectify it. Below listed are a few implementations of Blockchain –
- Bank & Finance –
It is said that no other industry is not as much benefitted by blockchains like that as banking and financial organisations. This is because it changes the traditional way of banking. For instance, customers may expect their transactions to be processed by banks using Blockchain in only a few minutes. In addition, banks now have the ability to securely and swiftly transfer money between organisations thanks to blockchain technology.
- Currency –
For cryptocurrencies, the client’s money’s value may be jeopardised if their bank fails. Bitcoin is the result of the concerns of client money and bank failure. Crypto Functioning decentralised by keeping their activity in a network of computers is what is done by blockchain. In order to maintain the records and work or to lower the risk, it cost some transaction charges. Additionally, it can provide a more stable currency with more applications and a larger network of people and organisations to those who live in nations with shaky currencies or financial infrastructures.
- Health Care
Healthcare providers and organisations can use Blockchain to preserve their patients’ medical records safely. Patients can feel secure knowing that their medical records are written onto the Blockchain after they have been prepared and signed. These private, sensitive health records might be encrypted and saved on the Blockchain with a secret key so that only authorised individuals can access them.
- Smart Contract
A contract agreement can be facilitated, verified, or negotiated using a smart contract, which is computer code that can be included in the Blockchain. Users accept a set of terms under which smart contracts operate.
- Supply Chains
As per some very trusted sources, the food supply chain industry is using the perks of Blockchain to monitor the movement and quality of food from the farm to the consumer. Also, blockchain technology allows suppliers to track the provenance of their bought products. This would enable businesses to confirm the legitimacy of both their items and generic labels.
The modern-day voting system facilitated by Blockchain has the ability to end election fraud and increase democratic turnout. By using blockchain it is impossible to alter the votes in the election. The blockchain protocol will also uphold electoral openness while lowering the number of people required to carry out an election and giving officials access to results almost immediately. This results in accuracy and wholesome result which ends the fraud in elections.
What are the Benefits of Blockchain Technology?
- A network of thousands of computers approves transactions on the blockchain network. There will be no need for human involvement because verification is all done by computers. Blockchain makes third-party verification no longer required, and with it, its accompanying costs.
- Blockchain doesn’t save any of its data in a single place. A huge number of computers copy and keep the record of the blockchain. As a result, Blockchain makes it more challenging for someone to tamper with by dispersing that information over a network as opposed to keeping it in a single central database.
- In the case of blockchains, users can see transaction data (only the public databases), but they cannot access information that would identify the users who made the transactions.
- The blockchain network must confirm the legitimacy of a transaction when it is recorded. On the Blockchain, thousands of computers hustle to verify that the transaction’s data are accurate. Once the machine verifies the transaction it is then added to the block of the blockchain. Insuring a secure transaction as a result.
- The majority of blockchains use only open-source code. Anyone can see its code. Therefore the security of cryptos like bitcoin is accessed by auditors.
What are the Drawbacks of Blockchain Technology?
- Blockchain technology can help consumers save money on transaction costs, but it is not entirely free.
- The potential shortcomings of Blockchain may be studied perfectly using the example of Bitcoin. Bitcoin’s method can add a new block to the network in around 10 minutes. However, according to estimates, the blockchain network can only handle roughly seven transactions per second at that rate.
- While secrecy on the blockchain network safeguards users’ privacy and prevents hacks, it also enables illicit activities and trade on the network.
- Concerns concerning governmental regulation of cryptocurrencies have been raised by many in the crypto community.
With each passing day, the number of Blockchain is consistently increasing. As of official data, in 2022, there are nearly 10000 more cryptocurrencies based on blockchains.
Blockchain, a concept on everyone’s minds as an investor in the country, promises to reduce intermediates while improving accuracy, productivity, privacy, and expenditure in both commercial and government activities.
Hopefully, the blog cleared all your doubts regarding what Blockchain is and its significance.
About the author
Richard Winston is an educator himself and is associated with MyAssignmenthelp.com offering students subject guidance on IT and related technicalities.