Understanding Blockchain Technology
- Samra Taban
Like open source technology and e-commerce back in the day, blockchain technology is the next big thing set to rule over all industries right from healthcare to personal banking. The definition of blockchain differs from person to person. Many people are familiar with the term but very few of them really understand what blockchain is and how it works. You might have come across the term Bitcoin. Blockchain technology is the principle behind cryptocurrencies such as Bitcoin. In simple words, blockchain makes use of incorruptible digital distribution ledgers, otherwise understood as a list of transactions that are replicated on several computers instead of storage in one central server. If the ledger is shared on a public platform, whenever there is an update, the ledgers are updated on all the computers in the network. It can be used to send money and sensitive information without an administrator. It holds the capability of revolutionizing economic transactions. In simple words, it is a global online database that is accessible to anyone. You can perceive it to be a normal database with additional software that allows the addition of new rows, validated and broadcast to all peers in the network. Thus, permitting all the members to have the same database.
There is absolutely no denying it that blockchain technology is an ingenious invention with numerous applications. It was developed by a person or a group of people functioning under the pseudonym, Satoshi Nakamoto. By allowing the distribution of digital information without copying it, blockchain has developed a framework for a new type of Internet. A Blockchain is controlled by a set of participants. Every record or transaction is called a block. Each block is linked to a specific participant When a transaction is made, a block is created with all the transaction details and is passed on to the other blocks one after the other; forming a blockchain. All these blocks are cryptographically secured, preventing any possibility of hacking. In addition, blockchain is immutable i.e. it cannot be changed once it is entered. It would take a mighty force of computational power to alter it. This characteristic makes the network the most secure technology that we have today. The famous Bitcoin, a form of virtual currency, makes use of the same technology to make transactions without a third-party, ensuring authenticity and security. Blockchain technology also allows complete transparency. All participants have access to the information created in the network. There are various blockchain permutations that are broadly categorized into public and private blockchains.
The future of Blockchain:
Blockchain can completely transform the way we make transactions. Bitcoin has already made a strong mark as the cryptocurrency that uses an open network with digital bits and encryption to transfer money. Ethereum Blockchain, another virtual money application, has also created several opportunities. Companies are starting to explore the potential of this technology which is almost limitless: collecting taxes, permitting migrants to send money to the family if banking in the country is difficult. Blockchain can also find its ways into industries such as shipping, healthcare, and military if the working principle is employed in the right fashion.
The blockchain is still in its infancy, tackling setbacks in its use for business. It can be considered as a foundational technology with the help of which more economic and social systems can be made. Blockchain technology can change the way we exchange intellectual and financial property. It is still in its nascent stages but it holds great promise and gives the customers something to watch out for, in the future.