Introduction to Blockchain:
In this post, I will walk you through many interesting benefits of Blockchain Technology. If you have ever heard of the term “Cryptocurrency” then you also might come across the term “blockchain”. Let’s have a brief overview of cryptocurrency. A cryptocurrency is nothing but decentralised digital money.
And it is based upon the technology commonly referred to as Blockchain. In the case of cryptocurrency, blockchain acts as a public digital ledger. So let’s now focus on blockchain.
Blockchain technology is not new, in fact, it was first introduced in the year 1991. It was created by a group of researchers. And the main purpose to create Blockchain was to timestamp digital documents in order to avoid document tampering.
As the name suggests, a blockchain contains a series of blocks. And in each block, there are several transactions. At the time of a new transaction, a block gets added to the chain. And the hype around blockchain is real. When we go for percentage then 84% of companies are going after Blockchain.
So now let’s see the elements of a Blockchain. And then we will see the working of blockchain. And after that, we will focus on the interesting benefits of blockchain.
Elements Of Blockchain:
There are mainly three elements present in a blockchain. And they have distributed ledger technology, immutable records and last but not least is the smart contract. So let’s see each of these one by one.
- Distributed ledger technology: The blockchain network members gets access to two things. First one is record of transactions and the second one is the distributed ledger. When we talk about this technology then, in this transactions are only recorded once. And this is similar to traditional business networks and is completely okay. This minimizes the chances of duplication which is a great thing.
- Immutable records: Immutable means any particular thing which cannot be changed. So in this it is not possible for any blockchain participants to tamper with the data or make any changes with the data. In case if the transaction records error(s), then a new transaction must be added to eliminate that error(s).
- Smart Contracts: Smart contracts are nothing but a set of rules stored in a blockchain. The smart contracts are automated in nature. This contract can have information like conditions for corporate bond transfers, travel insurance terms, etc.
So now the time is for understanding the working of blockchain and after that, we will see all the benefits related to this technology. So without any delay let us understand how blockchain works.
How Blockchain Works?
So as the name suggests, a blockchain is a combination of several blocks. And they are joined together forming a chain. So now let us understand what are blocks? a typical block contains three important things and they are Data, Hash of the block and hash of the previous block.
The data part mainly depends on the type of blockchain. For example, in a bitcoin blockchain, the data of the block stores information about the transaction. And that includes the sender, receiver and the number of coins.
The next part of the block is hash. The Hash of each and every block is unique, which means that no two or more blocks can have the same hash. You can consider hash as a fingerprint since fingerprints cannot be the same. The hash of the block helps in the identification of the block and all of its contents.
The hash of the block is calculated after the block creation process. If any changes happen to the block, its corresponding hash also gets changed. In other words, hashes are very useful to detect changes in a block. So now let’s move to the third part of the block which is the hash of the previous block.
The hash of the previous block makes it possible to create a secure chain of blocks. Let us take an example, depicted by the above image. In the image, we have three blocks and each block is pointing to the previous block. This makes a chain of blocks. Furthermore, the first block is different to the rest of the blocks as it doesn’t point to any block. Such kind of block is commonly known as the Genesis block.
But hashes alone cannot secure blockchain, I am saying this because it is possible to tamper a hash of a block and recalculate the hashes of the rest of the blocks. This is possible because of the powerful modern computer system. Modern computers these days can calculate hundreds and thousands of hashes per second.
To eliminate this possibility of tampering, this technology has something called the proof-of-work. It is nothing but the algorithm that slows down the new block creation process. These blocks are mainly managed by the people who are commonly known as Miners. Every block creation process takes about 10 minutes and is then accepted by the network.
Benefits of a Blockchain:
- Greater Trust: Your data is 100% confidential on the blockchain network. And as a member of blockchain you can be assured that you are receiving accurate and timely data. However a point to note that is the records can be shared only to those members the account holder grants permission to. So overall this creates a significant amount of trust in its users.
- Decentralised Structure: Apart from creating trust in users, another interesting benefit of blockchain include its decentralized structure. It provides an environment where data transfers can take place without any third party involvement.
- Security and Privacy: As we all know the blockchain system does not require any third party to work. So it ultimately reduces the chance of fraud or theft, providing maximum security and privacy.
- Reduced cost: As no third party is involved in the blockchain ecosystem. It saves unecessary costs for performing its functions. And this leads to cost-saving activities.
- Speed: There are no intermediaries and less manual intervention this makes transactions to occur faster and makes it more reliable. In addition to that, blockchain complete transactions within a fraction of seconds. And this is
- Control of Data: In this modern world, we cannot ignore the importance of data. And the Blockchain technology is boon when we talk about control of data. This technology makes it possible for the individuals to have a complete control over the data that belongs to them.
- Immutability: As we have discussed earlier there is no way to alter the recorded transactions,this makes it reliable and secure method to carry out transactions.
- Innovation: And this is the last interesting benefit of blockchain in my list and it is innovation. The leaders from multiple industries are considering blockchain to track down and solve the problems and this ultimately improves the result.
we can conclude that blockchain is one of the most emerging technology, that most people want to know about. Moreover, we can also say that it is helping many people to solve modern-day problems which is another good aspect of it. So that’s all for this post. Put your thoughts about this technology in the comment section below. Thanks for reading the post, see you in the next one.