What is Blockchain?
A blockchain is a shared and stable database that is highly secure and experienced by all the persons in a distributed thread of networks, multiple transactional data can be put up and easily reviewed. Bank of England stated blockchain as “A technology that permits people who don’t know each other to have faith in a shared record of events”.
Blockchain is a typically consistent chain of blocks where blocks are rigid structure to keep records of data which are attached to each other through a mode of the chain by using the hash.
In other words, the blockchain is the public ledger where all the bitcoin transactions have been executed. It is in continuation to grow, each new transactional data is fed to the new block in almost every 10 seconds and block gets further added to the blockchain in linear and sequential order. The blockchain contains the complete information of addresses and balances from the very first transaction to the latest one transaction stored in a block.
Blockchain acts as a list of a block in which each block consists of a number of transactions. It comprises of a decentralized, permanent data store in order to have a spreading network of users. Each transaction can be asked, providing better transparency and trust to all the people involved.
How does it work?
When the new data stored in the block, the block is added to the blockchain, we have already learned that blockchain is the chain of blocks, in the sequence to attach a block in the blockchain, it works in the four following steps:
- The transaction must occur.
- The transaction must be verified.
- The transaction must be stored in the block.
- The block must be given hash.
Try to understand this with an example, suppose you want to purchase an item from Flipkart, after clicking many products and checkout prompts, you finally make a purchase. After making a purchase, your transaction must be verified, When you simply go to the store and make a purchase, there is someone in charge of evaluating new data entries, in fact, this job is done by networks of computers.
While making a purchase on Flipkart, the same network of computers speeds up to check your transaction appeared in the form you supposed it did. At last, they confirmed the details, like, time of the transaction, the amount paid, mode of payment, etc. This complete process happens in a second.
Once you are done with your transaction verification, it gets permission to move forward. The amount of transaction, your digital signature, and Flipkart digital signature all are stored together in a block and join thousands and more similar transactions of others. Once all the transactions of a block get verified, it must be given a sole and recognizing code called a hash. Even, the block is also provided a hash of the latest block added to the blockchain. And, in last the block can be added to the blockchain.
What are the applications of Blockchain?
From the working of blockchain, we came to know that block in the blockchain store data about monetary transactions, blockchain is the secure mean of putting up data about other types of transactions, such as to store data of property exchanges, stands in the supply chain, votes for the candidates, etc. Here are some applications of blockchain;
For the use in banks: blockchain is continuous in nature, it never sleeps. By integrating blockchain in the banking industry, the user can see his transactions being processed within 10 min or earlier, the only time is consumed in adding a block to the blockchain. With the utilization of blockchain, banks have an excellent opportunity to transit funds in institutions more quickly and securely.
For the usage in cryptocurrency: blockchain is found to be a solid foundation for cryptocurrency like Bitcoin. Under the central authority system, user data and currency are at the notion( with respect to the concerned bank and government) technically, so user money would be at risk if he or she is living under an unauthorized government. Bitcoin or other cryptocurrencies can help in this case, as blockchain has a spread network of computers that allows bitcoin to work without a need of central authorities. It reduces risks and processing and transaction fees.
For the usage in healthcare: blockchain can securely store patients’ data and their medical records. When a medical record is generated and signed, it can be fed out in the blockchain, it gives proof and surety to patients as not to change their record. Medical records are kept secured with private keys in the blockchain so no one else can use it other than an individual who has data access.
For the usage in the property records: the process of maintaining records of property rights is heavy and inefficient, for the sake of active and dynamic working in any recorder’s office, local government employee should obtain a physical deed to enter records into the central database of country and public index. Blockchain has the capacity to drop the requirement of scanning multiple documents and following various files from an office.
What are the benefits of blockchain?
- Despite all the technical complexities in the blockchain, it has the potential to work in a decentralized form of keeping records of unlimited data. From user privacy and high security to lower processing costs with fewer errors, blockchain technology breaks the glasses of its complexity. Listed below are some benefits of blockchain.
- Enhance accuracy and performance efficiency without the involvement of humankind in verification.
- Huge reduction in costs by excluding third-party verification.
- It is the most transparent and obvious technology.
- All the transactions are private, secure and efficient.
- The process of decentralization makes it difficult to interfere with it.
What are the issues and limitations of blockchain?
- Undoubtedly, blockchain is coming out as world-changing technology, and somewhere it is, but it is not necessary that there are all the remedies of the cure for the world’s problems, here I am enlisting the shortcomings and issues with blockchain.
- When doing bitcoin mining, significant technology costs are associated with it, blockchain also has environmental costs.
- Records of operating and working usage in unauthorized activities.
- The sensitivity of data for being hacked.
- A hazardous environment gets constructed due to a lack of regularities.
- Speed inefficiency such as Low transactions per second.
- Blockchain can be slow, awkward, and unmanageable.
- Due to the complex structure of blockchain, end-users find it hard to appreciate the benefits.
Published by Oksana Kvitka