Long back I came across Blockchain technology in an article in 2011, I thought this is the technology we should all know. This new technology made me eager to learn more and more about this topic, as it is going to give transactions a new face. Now, after so many years of research, I have gathered a lot of information about this technology.
Since blockchain is such a new technology, there’s a chance it may not have consciously crossed your radar. If you are a newbie in the world of cryptocurrencies, and blockchain technology, this guide is for you. Let’s start with the basics. If you are a pro trader, you may learn a few new things that you didn’t know. This article shows that Blockchain certainly isn’t magic.
Let’s take a basic route:
What is Blockchain?
The blockchain is a new type of distributed technology. It is a time-stamped series of immutable record of data that a cluster of computers manage and a single entity owns them. Each block of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain). It is maintained by a peer-to-peer network of computers controlled by a common protocol for adding and analyzing new data. Although the ledger is visible to all the users it cannot be reversed or copied. This unique feature of blockchain makes it unique and remarkable.
let’s understand a bit of history under before we jump into the actual working.
History of Blockchain
According to wikipedia, Blockchain was in trend back in 1991. Stuart Haber and W. Scott Stornetta, initially experimented Blockchain. They aimed to design a system where document timestamps could not be altered. But they failed to implement.
Later, an unknown name ‘ ‘Satoshi Nakamoto’ framed the first blockchain in 2008 from where the technology has progressed. In 2009, ‘Satoshi Nakamoto’ released the first whitepaper about the technology. The whitepaper provided details about the technology and how well it enhance digital trust, the ‘decentralization’ part , which means no one has control of anything.
Yes! You heard it right. Still Satoshi Nakamoto is unknown, till date it has remained mystery.
Anyways, the world believes that Satoshi Nakamoto may be behind blockchain. The reason behind it is, the first transaction was in the name Satoshi Nakamoto.
It is said that Nakamoto enhanced the design using a Hashcash-like method to add blocks to the chain without any trusted party signature. The design was live on a core component of the cryptocurrency bitcoin, where it serves as the public ledger for all transactions on the network.
Basically, the terms block and chain were separate in Satoshi Nakamoto’s original paper but later came up as a single word, the blockchain, in 2016.
How Blockchain Works?
So, now when you know what is blockchain, you might be excited to know how actually this technology works. You must be wondering what is inside a Block?
Let us now have a look and understand how does Blockchain work.
Basically, A Block includes 4 main components
- Block Number or Index
Hash: It is the unique identity of a Block. Each Block is linked with the previous Block and the next Block. Thus, the linking of all the Blocks in a chain like structure makes the complete Blockchain. Each Block linked to the previous Block
Index: It is a Block number.
Data: Data is the implementation of a transaction on the Blockchain network. It includes ‘From’ and ‘To’ addresses, and additional inputs like adding a fee to the transaction and many more.
Timeframe: It is the time at which the transaction is complete on the Blockchain.
- A node begins a transaction by initially creating and then digitally signing it with its private key. A transaction represents various actions in a blockchain. In particular, it is a data structure that displays a transfer of value among the users. However, the transaction data structure includes source and destination addresses, relevant rules, and other valid data.
- A transaction is propagated by protocol, called Gossip protocol, to peers that analyze the transaction. Normally, you need more than one node to verify the transaction.
- Once your transaction is confirmed, it is then added in the block which is later propagated on the network. Thus, the transaction is confirmed.
- This latest block is part of the ledger, and the next block links cryptographically back to the previous block. This link is a hash pointer. Now, the transaction receives its second confirmation and the block receive its first confirmation.
- Further, when each time a new block is created transactions is reconfirmed. Basically, 6 confirmations in the network are needed to consider the final transaction.
How did blockchain emerge in cryptocurrency as full-fledged technology?
Before it was introduced in cryptocurrency, it marked its footprints as a concept in computer science. From being just a topic of discussion to Investment for Blockchain entrepreneurs have become the center of attraction across the globe.
The emergence of the blockchain in crypto space lead to a second-generation blockchain system. It was created on the concept of taking contracts and making them smart contracts. These smart contracts can be implemented in multiple ways across many industries. For instance, many healthcare industries are opting these smart contracts, to enhance security for patient information.
Benefits Of Blockchain in Cryptocurrency
This technology was made in such a way that any block or even a transaction that adds to the chain cannot be edited which in turn provides very high security.
It is designed in such a way that it can easily locate any problem and correct if there is any. It also creates an irreversible audit trail.
The Blockchain network provides a unique identity which is linked to account. It means that only the owner is operating the transactions. The block encryption in the chain makes it difficult for any hacker to break the setup of the chain
The blockchain technology is designed for quick process initiating the transaction. The transaction increased to a high extent and thus the time reduced to nearly minutes or even seconds.
Future of Blockchain Technology
Blockchain technology has a very promising future. It might take a considerable amount of time to hold on and become useful in routine. To be specific, blockchain technology is still in its infancy stage. Thus, much potential has yet to be realized. But in the coming years, we can see more advances in blockchain technology across multiple industries.
Different industries using Blockchain technology
We have probably heard that blockchain technology is going to revolutionize different industries. But what actually is it and how is it going to influence these industries? Let’s have a look.
Banking: blockchain technology is replacing fiat currency. The reason behind it is cryptocurrency doesn’t require any central authority to verify and process the transactions as in case of bank deposit or withdrawal.
Health: Implementing blockchain technology can help healthcare sectors to avoid common issues like fraud, lost records. Meantime, it helps them perform effective treatment and increase the ability of healthcare systems within a cost-effective mechanism.
Gaming: The emergence of blockchain technology across the gaming platform provides new ways for gamers to earn extra income. Through this, gamers will have ownership of coins in the form of points they’re winning while playing. However, you can even bid the points or coins in cryptocurrency. This method transforms the games that run on just internet into the games that run directly onto the blockchain.
These were the few industries using blockchain technology. You can find many more such firms.
Considering all the things, the technology is likely to bring digital currencies to the mainstream. Many well-known companies like Microsoft accept Bitcoin payments. Moreover, experts have predicted that, with blockchain technology, the world is likely to have a universal currency. It means many people still need to continue exploring the technology to enjoy the best version of it.