Blockchain technology, maybe you had heard this term about cryptocurrency. If you did not find out what the technology is, then, believe me, you need to know. Blockchain is one of the technological advances which would have multiple implications in the future. Many countries have already started deploying this innovative peer to peer technology for transforming the various sectors. In this guide to blockchain technology, we will help you in understanding blockchain technology from scratch.
Guide To Blockchain|What Is Blockchain Technology?
The first time, when you had come across the word “blockchain technology” (might be from some crypto enthusiast), you may have scrolled –what is blockchain technology? The Blockchain is undoubtedly a genius brainchild of Satoshi Nakamoto (a pseudonym to person or group who invented Bitcoin in 2009) which is being noticed by the new companies, startup even government authorities, as the solution of various systems.
Blockchain for dummies can be explained as a simple way of transferring the information from A to B in an automated, secured and transparent manner. Suppose A initiates the transaction, then simultaneously the process of creating a block will start. Thousands or millions of distributed computers will verify this block of a transaction on the network. After the block or transaction got verified (after solving the complex mathematical algorithm), the unique, verified block will be added to the open distributed ledger known as the chain of previously confirmed blocks or Blockchain.In this guide to blockchain technology, we also want to assert that the network is highly secured through cryptography (somewhat like encryption!) that users can only edit the few parts of Blockchain and that too if they have private keys or digital codes mandated for editing.
How Does Blockchain Technology Work?
After the brief introduction to blockchain technology, let us try to understand how Blockchain works through this guide to blockchain? According to some enthusiasts, who are well aware of blockchain technology, consider it as the “internet of value” where anyone can publish any information which is accessible to anybody in the world having the internet connection. Similarly, Blockchain permits anyone to send value anywhere in the world where the file of Blockchain can be accessed. Blockchain technology is the smart amalgamation of three leading technologies: cryptography, peer-to-peer network of distributed ledger and computing for storing the record of transactions on a network.
Cryptography keys (meant for maintaining the secured network) contain private and public keys which enable the completion of transactions between the parties. Individual transactions on Blockchain must have both these keys to produce a secured digital identity reference or digital signature( used for authorizing and controlling transactions.) The large number of people which are meant to approve the transactions, use their digital signatures on peer to peer networks. When the deal gets authorized by consensus and certified by mathematical verification, the secured transaction takes place among the parties involved. Thus, this guide to blockchain technology can sum up that blockchain users utilize the cryptographic keys to complete different types of digital interactions on peer-to-peer networks.
What Are The Benefits Associated With Blockchain?
As Blockchain has been hyped buzzword amongst the industrialists, startup founders and also amongst the various authorities of the government, we must explore Blockchain and its benefits in this guide to blockchain technology.
Decentralization: A single entity does not store information, but everyone in the network owns the information (cannot edit until you have private keys!). No involvement of the middleman but the transaction gets recorded on the chain itself, hence a democratized system.
Transparency: In terms of the transaction, the network (not in terms of the identity of the person) is transparent as everybody can access the data on an openly distributed ledger of the verified transactions. It aids in providing traceability and also reduces the chances of duplicity.
Immutability: You can access the data but cannot tamper it unless you have the private keys to edit it. Blockchain helps in information dissemination more easily.
Security: Cryptography that is, digital codes are used to secure the data with the help of unique private keys to each user.
Thus, blockchain technology has the benefits of the need for the present and future. So, the communities who misconceived the technology are now working to utilize Blockchain for better outputs.
Blockchain Technology and Its Applications
In this guide, till now we understood about what technology is, how it works etc. etc. Now, let’s move on to the real world, where this technology is helping the industry or have the potential to revive or upgrade the system deployed by various institutions. So, let us find out the blockchain technology and its applications in this section of guide to blockchain.
- Smart Contracts: Blockchain technology enables the coding of contracts that will be executed after the mentioned conditions get fulfilled. For instance, in case of a warranty claim, payment of derivative in financial markets, insurance renewal and many more.
- Identity verification: Online verification of identity can take place in a hassle-free and quick manner via Blockchain. Also, it would reduce the chances of cyberattacks associated with central authorities, involved in database management. For instance, Decentralized App is utilized in Zug city of Switzerland to verify the electronic identity of citizens.
- Internet Of Things (IoT): The evolving technology of IoT, which is the network of interconnected physical devices with software and sensors along with internet connectivity, will be used to collect and exchange the data. The distributed ledger technology can improvise the IoT by combat hacking, data immunity against tampering and also the decentralization of control.
- Cloud Storages: Decentralized cloud storage like Storj, Sia, Ethereum Swarm etc. can enable the archiving and storage of the files confidentially. Blockchain technology-based cloud storage spaces are less prone to cyberattacks also.
- Governance of Financial Institutions: central authorities currently follow Labour-intensive multi-steps process for every new customer. Also, one or other day, institutions suffer from money laundering, fake accounts, gambling etc. Blockchain technology has the potential to revive the process of Know Your Customer (KYC) and Anti Money Laundering Regulations (AML). Startups like Polycoin, Tradle are also working for AML/KYC solutions.
- Blockchain technology also finds its applications in elections and voting system through solutions like Blockchain Voting Machine, Follow My Vote etc. as identified by the guide to blockchain.
- Companies like Uber, Airbnb, OpenBazar utilize blockchain technology to support their payment system to enable peer-to-peer exchange.
- Crowdfunding companies like Kickstarter and Gofundme are utilizing the network via Blockchain by connecting the startups for venture/angel investors for sufficient funding, thereby initiating the new paradigm of economic cooperation as per the guide to blockchain.
- Better governance by enabling the organizational decision making through the latest technology of Blockchain can be achieved. Apps like Boardroom can help in making fully transparent and secured decision making.
- Supply chain management by satisfying the customers for the authenticity of the products and their ethical claims is possible with the help of blockchain technology. Easy traceability and transparency can also be an added advantage.
Thus, more you wish to dig, more you can find the applications of blockchain technology in the various sectors of industry from health to education, governance to banking, every system can be revived by deploying the Blockchain in the system. So, this guide to Blockchain hopefully helped you to know about one of the latest technologies and its utility.
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