Demystifying The Blockchain: How It Works?

There is no wrong with saying that the 21st century is all about advanced technology. From using a remote for controlling devices to using voice notes for giving commands (IoT). Technology like IoT has made a space in our regular lives and gained pace in the past decade. Blockchain is a new technology that is getting global recognition. So without wasting time, let’s deep dive and learn everything about this trending technology.

What is Blockchain technology?

A Blockchain is nothing but a database that stores encrypted data/information in blocks and later chains them together to form a chronological single-source of data.

In Layman’s terms, Blockchain stores information in groups called blocks. Once the block’s storage capacity gets filled, it gets closed and connected with a previous block (using hashing function), forming a chain of blocks popularly termed “BlockChain.”

When did Blockchain get the limelight?

There is nothing incorrect with claiming that Blockchain is a ground-breaking technology that has been remarkably transforming sectors.Stuart Haber and W Scott Stornetta invented Blockchain in 1991. But it gained mammoth popularity in 2009 when a Software Developer named Satoshi Nakamoto implemented Blockchain technology to create the first-ever cryptocurrency, i.e., Bitcoin.

Post the development of Bitcoin, many other cryptocurrencies took birth, namely Dogecoin, Ethereum, Litecoin, Cardano, Polkadot, and plenty more.

How does Blockchain technology WORKS?

The primary aim of Blockchain is to collect digital information and later distribute it over computer networks, but it can not be modified or edited. In Blockchain, records of transactions cannot be manipulated, tempered, deleted, or vanished from the system.

Blockchain was discovered in the late 1990s but exploded via the development of Cryptocurrencies, Decentralized finance, and NFTs.

5 STEPS to know about the working of Blockchain

1. A new Transaction is made
2. Transaction is shared over the Internet
3. Network confirms the validity of a made transaction
4. Post confirmation, glued together into blocks
5. Blocks are chained together (storing complete details of previously made transactions)

Is Blockchain secure?

Yes, Blockchain is highly secured, and the reason behind this is the Decentralization of data and Redundancy.

Decentralization: Decentralized nature of the network keeps the Black-Hats( Intruder) away from your valuable data. No centralized data storage means no point in getting attacked.

Redundancy: Redundancy provides ultimate security by requiring multiple verified confirmations, making it an impossible task for any intruder to insert inaccurate or fraudulent data into the block-chain records.

Pros of Blockchain Technology

• Blockchain can trace orders, payments, and production.
• Blockchain assures fidelity and security of data.
• Records are shared only with network members(authorized person)
• Generates trust without the involvement of any trusted third party
• Being transparent, one can see all details of a transaction(Peer-to-Peer)
• High data transparency and security over the network
• One can check the authenticity of the asset
• Eliminates third party saves capital for business
• Data can be received quickly and helps to get sky-rocketing business growth.

Cons of Blockchain Technology

• Only perform seven transactions per second (IPS).
• With the increase in the number of transactions, the database also increases.
• Transparency can be used for tracking one’s identity(loophole in privacy).
• Requires a large network to get full benefit.
• Not easy to understand (Non-techs can find it difficult).
• Each transaction requires Digital Signature.

Implementation of Blockchain Technology

1. Blockchain Technology in Finance

Transactions in Blockchain technology require any financial institution like Banks, mediators, or central authority, which means it allows direct payment flow between operation participants while sitting in any corner of the world.

2. Blockchain in the Insurance sector

Blockchain implementation brings new functioning models to the insurance sector too. Firms incorporate block-chain applications, wherein Blockchain is a loan sponsor among two parties, which aids them in boosting insurance services.

3. Blockchain in the Banking sector

Blockchain is an innovative technology with massive potential for further growth, and it assures safe data storage, transaction security, and trusted operations. Banks are the major financial institutions investing in blockchain applications.

4. Blockchain Technology application in healthcare

The healthcare sector can also benefit from blockchain technology. Data plays a crucial role in impacting the quality of services and people’s lives. It concerns the security and safety of different documents, patient clinical records, and confidential medical reports.

5.Blockchain Technology in Supply chain

The technology is utilized in the supply chain and offers more transparent and secure monitoring. The technology help logistics firms track goods movement through the decentralized database.

6.Operating System for IoT:

Cybersecurity is another crucial topic that requires additional focus. We are living in an era of the Internet where everything becomes viral with the blink of an eye. Blockchain could be the world’s one-stop solution for preventing hacks and malicious practices.It is contributing to developing innovative methods for increasing the security of IoT companies. Taking the example of a mobile app XAGE Security, the first Cybersecurity platform that used block-chain technology.

7.Cross-border /International Payments:

Blockchain technology-enabled cross-border payments to be made in a secure manner. TraceDonate is a mobile app that allows transparent and traceable donations.

8.Real estate and land title transfers:

Governments and private organization’s have started to look at digital solutions as an approach to reduce the incidence of frauds.  How? Companies have begun to use Blockchain technology to improve the efficiency, accessibility, and transparency of real estate.

9.Copyright and royalty protection

In today’s fast growing world of the Internet, copyright issues and laws on music, video, and any other kind of content have become hazy. Blockchain is the one-stop solution that could beef up those copyright and ownership laws, ensuring the real creator/owner gets their credit and fair share.

Bottom-Line

Since the first digital currency Bit-coin, Blockchain technology has become the new urge in this era and made a revenue of a massive USD 4.93 and is in no mood to slow down in the upcoming years. It is anticipated to reach $34 billion by 2026. Blockchain technology has a very bright future and will mark its presence in many areas, namely the Internet of Things (IoT), Data analysis, Law-making, and Finance (Banks).

Photo by Shubham Dhage on Unsplash