Blockchain – The Basics you should know

A community following banking, investing, or cryptocurrency over the last ten years may be familiar with “blockchain”. What is blockchain technology? It is a record-keeping technology behind bitcoin. In case of learning blockchain, you may have come to related terminologies- such as distributed, decentralized, and public ledger.

What is blockchain?

Blockchain

A Blockchain can be defined as a chain of the block that contains information. This technique is planned to timestamp digital documents so that it’s not possible to backdate them or temper them. The blockchain is used to the secure transfer of items like money, property, contracts, etc. This transfer is carried out without requiring a third-party intermediary like a bank or government. When information is recorded inside a blockchain, it is extremely hard to transform it. 

The blockchain is a software protocol. Internet is necessary for running the blockchain. It is also called meta-technology as it affects other technologies. It consists of some pieces: a database, software application, some connected computers, etc. There are many wrong assumptions about blockchain. So just clear these points.

What blockchain is not?

⦁ Blockchain is not a Bitcoin, actually it is a technology behind Bitcoin.

⦁ Blockchain is the ledger to keep track of who owns the digital tokens while bitcoin is the digital token.

⦁ You can’t have Bitcoin without blockchain, but you can have blockchain without Bitcoin.

Need of Blockchain-

1. Time reduction: 

Blockchain plays an important role in the financial industry. It does not require a lengthy process of verification, settlement and clearance also, so it allows quicker settlement of trades. This is because a single version of agreed-upon data of the share ledger is available between all stakeholders.

2. Reliability: 

Blockchain affirms and confirms the identities of the interested individuals. This evacuates double records, reducing rates and accelerates transactions also.

3. Unchangeable transactions: 

After registering transactions in chronological order, Blockchain ensures the unalterability of all operations.  This means when any new block has been added to the chain of ledgers, it cannot be removed or altered.

4. Fraud prevention: 

The concepts of shared data and consensus prevent possible losses due to fraud misappropriation. In logistics industries, blockchain is a monitoring system to reduce costs.

5. Security: 

Attacking a traditional database is the bringing down of a specific target. Using Distributed Ledger Technology, each party can hold a copy of the original chain. So the system remains operative, even the large number of other nodes fall.

6. Transparency:

Changes to public blockchains are publicly viewable to everyone. This gives more transparency, and also all transactions are changeless.

Versions of Blockchain-

1. Blockchain 1.0: Currency

The implementation of distributed ledger technology prompted its first and obvious application: cryptocurrencies. It is used in currency and payments. It permits the financial transactions carried out through blockchain technology. Bitcoin is the most common example in this segment.

2. Blockchain 2.0: Smart Contracts

Smart Contracts are the small computer programs that work with the blockchain. They are the computer programs that automatically executes, and check conditions that are defined earlier like facilitation, verification or enforcement. It is used as an alternative for traditional contracts.

3. Blockchain 3.0: DApps:

DApps is an abbreviation of decentralized application. It has their backend code that runs on a decentralized peer-to-peer network. A DApp can have frontend code and user interfaces written in any language that can make a call to its backend, like a traditional Apps.

Structure of Blockchain-

Basically, blockchain is a public digital ledger. This ledger records transactions across computers. What makes it successful and popular? The answer is, it is centralized and distributed. Let us consider one example- Let’s say that person A wants to send some Bitcoins to another person B. To do that, they must know what is wallet address of person B. This wallet address is usually similar to an email. But we use this wallet address to send money rather than emails. Once the money is sent, it must be verified by every node. This node is a part of the blockchain network to get to person B’s wallet. In this transaction, every computer on the blockchain makes a transaction record and also saves it. Hence rather than having one transaction record kept in a bank, there are thousands of records stored in thousands of computers.

You might not like the thing of having your transaction records available on so many computers. This issue is resolved by making transactions mysterious. This is achieved by using cryptography. Hence cryptography is vital part of this technology. In case of changing transaction records, it would have to access every node ie., computer. But this is impossible. Blockchain miners are the people dedicated to devices and blockchain. Devices of these blockchain miners are the nodes on the network that validate transactions and store it in distributed ledger. These miners are get rewarded in bitcoins for their services.

Use Cases of Blockchain-

1. Government sector-

Blockchains are used in government sector for digitization of document/ contracts and proof of ownership. It can also be used for Tele-attorney service, registration and identification, IP registration and exchange, Tax receipts Notary service and document registry.

2. Markets-

Blockchain is used in marketing for billing, monitoring and data transfer. Also it is useful for Quota management in supply chain network.

3. IoT-

Blockchain technology is used in IoT for agricultural and drone sensor networks, smart home networks, integrated smart city, self-driving cars, robots and digital assistants etc.

4. Health-

Health sector uses Blockchain for data management, Big health data streams analytics, Digital health wallet smart property and personal development contracts etc.

5. Finance –

Digital Currency Payment, Inter-divisional accounting, Clearing & Trading & Derivatives and Bookkeeping also uses Blockchain technology.

Future of Blockchain-

1.Most governments around the world will create or adopt some form of virtual currency. This leads to the development of nations. 

2. By 2030, there will be more trillion-dollar tokens than there will be trillion-dollar companies.

3. Most of the world trade will be conducted using blockchain technology.

Disadvantages of Blockchain-

1.Technology cost

2. Speed inefficiency

3. Illegal activity

4. Hack Susceptibility

Conclusion-

Blockchain is a new technology that will help nation and also businesses for development. Blockchain is also used in Healthcare. Hence, it is most significant use of Blockchain technology.

Interested in incorporating blockchain to your business? Solace will be the perfect place to get started. Solace expert’s in blockchain will help your business to step forward in a wide market. For effective blockchain development, contact us.