Blockchain Technology – The rapid progress of Blockchain technology is showing no signs of slowing down. In the past few decades, many things that seemed impossible have turned out to be false, such as high transaction fees, double spending, net fraud, retrieving lost data, etc. But, now all this can be avoided with the help of Blockchain Technology. When it was first developed in 2008, blockchain was primarily used for cryptocurrency transactions (Bitcoin, Ethereum, Binance Coin and etc) . It is now used in a wide range of industries for a variety of reasons, including Accounting, Financial services, Smart contracts, Storage management, Security.
What is Blockchain Technology?
A blockchain is an electronic record of transactions or tracking assets in a business network. that is maintained by a network of computers in a secure manner that is difficult to hack or alter. The technology enables individuals to transact directly with one another without the use of an intermediary such as a government, bank, or other third party. An asset can be either tangible (a house, car, cash, or land) or intangible (intellectual property, patents, copyrights, branding). A blockchain network can track and sell almost anything of value, lowering risk and costs for all parties involved.
The expanding list of records, known as blocks, is connected together via cryptography. Each transaction is independently validated via peer-to-peer computer networks, time-stamped, and added to a growing chain of data. Data cannot be changed once it has been recorded.
While popularised by the increasing use of Bitcoin, Ethereum, and other cryptocurrencies, blockchain technology has promise uses in legal contracts, property sales, medical records, and any other industry that needs to authorise and record a series of events or transactions.
Why is Blockchain Technology so important?
Information is the lifeblood of business. The faster and more accurate it is received, the better. Blockchain is great for delivering that information because it provides immediate, shareable, and entirely transparent data recorded on a blockchain network that can only be viewed by network users with permission. A blockchain network can track orders, payments, accounts, and production, among other things. And, because members have a unified perspective of the truth, you can see all aspects of a transaction from start to finish, offering you greater confidence as well as new efficiencies and opportunities.
The essential components of a blockchain
- The technology of distributed ledgers
- Immutable records
- Smart contracts
1. The technology of distributed ledgers
The distributed ledger and its immutable record of transactions are accessible to all network participants. Transactions are recorded only once with this shared ledger, reducing the duplication of effort that is common in traditional commercial networks.
2. Immutable records
After a transaction has been logged to the shared ledger, no participant can edit or tamper with it. If an error is found in a transaction record, a new transaction must be entered to correct the issue, and both transactions are then visible.
3. Smart contracts
A set of rules, known as a smart contract, is stored on the blockchain and implemented automatically to speed up transactions. A smart contract can specify the parameters for corporate bond transfers, the payment of trip insurance, and much more.
How blockchain Technology works?
A blockchain ledger is made up of two types of records: individual transactions and blocks. The first block comprises of a header and data pertaining to transactions occurring within a specific time period. The timestamp of the block is used to generate an alphanumeric string known as a hash.
After the initial block is established, each successive block in the ledger utilises the prior block’s hash to determine its own hash.
Before a new block can be added to the chain, its validity must be validated by a computational process known as validation or consensus. At this point in the blockchain process, a majority of nodes in the network must agree that the new block’s hash has been calculated correctly. Consensus ensures that all copies of the distributed ledger of the blockchain are in the same state.
Once a block is added, it can be referenced but not altered.
If a block is swapped out, the hashes for preceding and following blocks will change, disrupting the shared state of the ledger.
When consensus is no longer achievable, other computers in the network are notified, and no new blocks will be added to the chain until the problem is resolved.
The block that caused the problem is typically removed, and the consensus process is redone.
Types of Blockchain Technology
Blockchain platforms come in both
- Permissioned Blockchain
- Permissionless Blockchain
1. Permissioned Blockchain
A distributed ledger that is private is known as a permissioned blockchain. Users with permissions are the only ones who can access it. Users must authenticate themselves using certificates or other digital methods, and they are only permitted to carry out the exact acts that the ledger administrators have authorised them to. Permissioned blockchains are generally used to manage supply chains, create contracts, verify payment between parties, and much more.
2. Permissionless Blockchain
Permissionless blockchains are public blockchains that let anybody to participate in validating and mining transactions, as well as using the system to buy, sell, and exchange assets. Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and Dogecoin (DOGE) are examples of permissionless blockchains (DOGE). Anyone can join the network, send and receive transactions, run a node, read, copy, and contribute to the code, and participate in the consensus process using these blockchains.
The Benefits and Drawbacks of Blockchain Technology
The following are the benefits and drawbacks of blockchain technology.
Benefits of Blockchain Technology
This is the core characteristic of blockchain technology, and the advantage is that no additional application is necessary to function as an intermediary to authenticate transactions or operations, lowering transaction validation times.
This point gives various benefits since, in the first place, no one controls the network, allowing different users to constantly have several copies of the same information.
Furthermore, because a node failing does not imply a generalised failure in the network, this property makes it robust and resilient to any sort of failure.
Similarly, having a dispersed network means that there are almost no errors because the information must be checked by many participants in this network. Erroneous or harmful information within the blockchain becomes nearly impossible.
Low costs for users
The decentralised nature of Blockchain enables for the speedy and secure validation of person-to-person transactions. By eliminating the need for an intermediary, users save money.
Drawbacks of Blockchain Technology
High implementation costs
While this technology has minimal user costs, it also has substantial implementation costs for businesses, which delays its mass adoption and implementation.
It is inefficient for multiple network users to validate the identical actions because only one will obtain the reward from this mining process. This method, and the fact that many people are doing the same thing, implies a massive waste of energy and technology that is not very environmentally friendly.
Excessive security can also be an Achilles heel; in the case of private keys, as has been recorded on numerous times, once lost, it is nearly hard to recover these keys, posing a concern for all holders of cryptographic values.
As the number of users increases, so will the number of operations that must be integrated into the blocks to be stored, requiring more space inside the miners’ computers, eventually exceeding the capacity of the hard discs.
Because there will be no need for intermediaries once Blockchain technology is embraced and implemented, all of the intermediation sectors for the validation of payments and procedures will be reduced to the point of disappearing, as will the jobs required for them.
Blockchain technology is game-changing. It will make life easier and safer by changing how personal information is stored and how goods and services are purchased. Every transaction is recorded in a permanent and unchangeable record thanks to blockchain technology. Fraud, hacking, data theft, and information loss are all impossible with this unbreakable digital ledger. Manufacturing, retail, transportation, healthcare, and real estate will all be affected by the block chain technology. Google, IBM, Microsoft, American Express, Walmart, Nestle, Chase, Intel, Hitachi, and Dole are all aiming to become early blockchain adopters. Blockchain has the potential to revolutionise about $400 trillion across numerous industries.
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