You might be still fuzzy on the terminologies like Bitcoin and Blockchain. These two technologies are touted as the most prominent technologies of the next decade. But there are many who are skeptical about the disruptive nature of the Blockchain technology. Blockchain application development company are looking at the brighter side of this technology.
Blockchain is known by many as the technology that is behind Bitcoin. But the way the technology is used extends far beyond digital currencies. Blockchain is better defined as a technology that will transform the way we make our online transactions.
If we need to know further details, we must explore on “What is a Blockchain?”.
What is a Blockchain?
Blockchain is basically a database that resides on a peer-to-peer network of computers – known as nodes. It is a distributed ledger technology. It ensures a chronological documentation of transactions.
The Blockchain allows the participants to transfer assets among themselves – without any intermediaries like banks. It helps to build a trustworthy relation. The data in Blockchain is not held in one place but remains atomized – spread across the multiple nodes in the same network. The blocks are locked by cryptography. This ensures the authenticity of each transaction and makes them immune to any sort of forgery.
Moreover, the participants in the network are accessible to not only the entire Blockchain but the history. When a transaction is recorded, then the accounts belonging to the participants will get updated.
Furthermore, we have all the transactions grouped together in what we call is a Block. The blocks are linked together to the previous ones. It is not easy to modify, tamper or falsify the records.
Next, what comes to our mind is “What makes Blockchain Revolutionary?”
Why Blockchain is Revolutionary?
The technology is revolutionary because it works irrespective of the type of transactions – goods, property or money. The greatest advantage it has is that of fraud prevention. This is because the transaction is recorded and distributed on a public ledger. It helps in tax collection or to send money, when banking becomes difficult.
Next comes the answer to the question “How Does a Blockchain Work?”
How Does a Blockchain Work?
First and foremost, two parties agree on a transaction. Then this information is broadcasted to the nodes of the peer-to-peer network and this validated.
On verification of the transaction, it is next added to the block. Each block has a hash and the next block will have a the hash of the previous block. This is what ensures the position of the block as it stays on the chain as it cannot be tampered with.
The block is then permanently added to the Blockchain and distributed among all the participants in the network. This means the transaction is complete now.
Next, we will provide with some more insights on this revolutionary technology of Blockchain.
Some more Insights on Blockchain
It becomes imperative to provide with more information on Blockchain. These are:
Decentralization and Reliability
Distributed as Blockchain is across the peer-to-peer network, there is no central point for storing the data. Since, all the participants have a copy of the Blockchain, this ensures reliability and security of the data.
Consequently, it becomes difficult for the hackers to attack – without a single point of failure. The Blockchain is not under a single authority – it is managed through the participants.
A transaction that is carried out as part of the Blockchain is recorded – made visible to all participants. However, in case of a Bitcoin, a pseudonym crops in, which does not exist for a Blockchain. Other than a bitcoin address, this pseudonym is linked to the personal information of the user – say a home address where an item is to be delivered.
A smart contract is a computer protocol that facilitates transactions and makes sure that the terms of the contract are met. Once the contract is finalized, it automatically triggers an action. A good example to cite is purchasing a computer program, once the payment is made.
Application in IoT
Smart Contracts and Blockchain are working in combination with each other- for the various IoT use cases. An example to cite is that of Slock.it for the German start-ups on house rentals, It has a smart contract in place along with a smart lock on the door of the house offered on rent. Once the stipulated rent is paid, the smart lock automatically opens up for the tenant.
We conclude, to say that the Blockchain is yet to emerge as a mainstream technology. But, we see a future when anyone who owns a computer will be able to make transactions in Blockchain.
Moreover, many of the renowned companies are racing towards this technology, of the likes of PWC, Microsoft and IBM. Despite the fact that the venture capitalists of the Silicon Valley have started to support the technology, it still seems to be a few years away from the real-time impact of the technology