Unlocking the Potential: The Future of Blockchain Technology
Introduction:
We’ve all come across the terms Blockchain and Crypto multiple times and wondered what the hype is about. Even tried to learn a thing or two about the technology, gave up just minutes into the article or video, and decided, not for me, too complex.
We have all been there, though it’s true that blockchain technology can be quite overwhelming initially, understanding the basics and working around makes way to best use the technology that took over the market and will continue to do so in the future.
Understanding the technology and spending some time around is totally worth it. So, let’s dig into the world of blockchain.
What Is Blockchain Technology?
Let's start with a Question.
How do you do a monetary transaction?
Through your bank, online wallet, or third-party apps. The struggles are obvious. There’s a technical issue with your bank server. Daily transfer limits exceeded or maybe even hacking or having to pay additional online transfer charges. This is where blockchain technology comes into play to allow transactions without a hinge, with bulletproof security.
In a nutshell, Blockchain can be described as,
Collection of records, linked with each other, strongly resistant to an altercation, protected using cryptography.
Or, in technical terms, IBM describes Blockchain as
“Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved”
Blockchain is like a Google spreadsheet shared in a network, where data is stored based on real transactions. The attribute to be highlighted is that everyone can see the data, but can’t corrupt it.
Understanding Blockchain Technology
Let's understand the basic terms in Blockchain and also dig a little deeper to better understand the versatile technology.
Blocks - Blocks are places where data is stored in Blockchain technology. If we consider cryptocurrencies, the data stored are transactions. There are multiple blocks that are connected by a chain, hence the name.
This chained block is called a ledger and is distributed publicly, accessible by all, and is called a publicly distributed ledger. The data within the block is encrypted by complex algorithms making it impossible to hack. This is the basis of blockchain.
Now, let’s get into the workings of blockchain.
Blockchain works on the basis of three features. Cryptographic keys, a peer-to-peer network containing a shared ledger and a means of computing, store the transactions and records of the network
Cryptographic Keys:
Every user in a blockchain has two keys - A private key and a public Key. These keys are necessary for performing a successful transaction. Each individual uses these keys to produce a secure digital identity reference, which is a crucial part of the blockchain. Keys are also identified as “Digital signatures” and are employed for authorizing and controlling transactions.
A public key is sort of like a public address that everyone knows of. The private key is a unique address that only the user knows of and can employ for transactions. For the encryption of data, different algorithms are used in blockchain.
Transaction happens all around the world and each transaction is validated and added block by block. People who validate these transactions are called Miners. Miners solve a complex mathematical problem and add the block to the blockchain. The process of validation through solving the mathematical problem is called Proof-of-Work and the process of adding the blocks to the blockchain is called mining.
Benefits of blockchain technology
Now that there’s a basic understanding of blockchain, let's go over a few benefits of blockchain.
It comes as no surprise that Security is the foremost benefit of blockchain. With complex cryptographic algorithms and the concept of a digitally shared public ledger, blockchain is non-permeable for hacking. The data and transactions are securely and permanently stored.
To follow, Decentralization is another primary benefit. With no central authority, blockchain works on a distributed network of nodes. This concept makes blockchain more resilient and less susceptible to fraud.
Cost Reduction - There’s no need for an intermediate authority and this leads to cost savings when blockchain offers the highest security. This benefit is capitalized by industries such as finance, supply chain, and healthcare.
Traceability - This benefit is employed in supply chain management where tracking of goods or services is extensive. Below is an example of how traceability can be used.
Applications of Blockchain Technology
Blockchain has versatile applications and can be used customarily for the needs of the user.
- Cryptocurrencies- Blockchain technology is primarily used in the world of cryptocurrencies. It allows for secure transfer of the digital currency without a central authority
- Supply chain Management - Blockchain permits a record of every transaction or record of the movement of goods. With accurate traceability and transparency, blockchain acts as a valuable tool in the Supply chain.
One classic example is when Walmart faced high return rates due to poor quality or damaged goods. The point of failure in this supply chain was hard to pinpoint due to the extensive changes in between. Walmart then adopted Blockchain. Every data at each stage was permanently inscribed in the system in blocks. Later when customers returned goods, it was made possible to trace back to the stage where the damage occurred, hence finding the problem area and fixing it.
Above said are a couple of examples of applications of blockchain. Additionally, blockchain is employed in
- Finance
- Healthcare
- Education
- Real estate
- Media and entertainment
- Insurance and much more.
Conclusion
In conclusion, With top-grade security and a de-centralized system, Blockchain allows security over personal data and is transparent and traceable. Blockchain digital transformation of transaction practices revolutionized the transaction world and promises many more applications, especially in healthcare for the record and maintenance of data.
As we move forward, it is necessary to gain knowledge and use the blockchain for our needs. The benefits of cost reduction, tamper proof, and decentralized system, increased security all represent the significance of blockchain. With ongoing research and development, and projects on blockchain, the technology holds more possibilities and one day could become a solid mark in the technological world.
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