What is Blockchain?
Modern day technology is aiding people communicate in an easier, and less complicated way. You can directly contact the person, without facing any obstacles in your path. Talking about communication means, that have also been evolved over the passing days, from posts to telegrams, telegrams to phone calls, phone calls to text messages, and from these messages to video calls. All is happening and is within the reach of your pockets, maintaining the trust between individuals no matter where they are.
Whereas, when this comes to the money, you have to put your trust in a third party. So that you can transact the money without facing any obstacles, safety issues, or theft threats. The Blockchain
technology will affect the status quo’s fundamental nature. Using the maths & cryptography it provides the people with an open decentralized database (of transactions involving value). Be it money, goods, property of any sort or even votes. The main objective is to develop a record of details that can be authenticated and verified by the community (entire).
What is a Blockchain? Blockchain’s a chain of blocks containing information. It was originally brought upfront by researchers in order to time-stamp the (digital) documents. So that tampering them is not possible not even backdating them.
The future global economy will be seen moving towards the direction of distributed trust & property. Where only an internet connection will be required for users to enter the Blockchain based transaction. Making the third party organizations go obsolete, and no longer necessary for a money transaction. This technology offers and delivers uses that are considered endless as well as very fruitful.
People foretell, that this technology will be collecting taxes in the nearing years. As well as make transactions a lot simple, faster and easier for the immigrants to send back money back to their countries. Countries, where access to the financial institutions is limited. Which will be resulting in the decrease of financial fraud. Making your money and transaction safer than before as every of your transaction will be recorded on a distributed and a public ledger. That is accessible by anyone, having a secure internet connection. I may regard them as wills and the contracts, executing themselves. Or also dating proof of an existence for ideas, similar to the patents.
It is promising enough to become a decentralized source of trust, but at the moment not everybody’s willing to embrace it. Not because they don’t like it but they are not ready to let go of their old ways yet. A major portion of the trust services, be it banking or notaries, would face challenges on price, volume and their very survival.
Public authorities can find this more difficult to enforce traditional financial regulations due to the new possibilities offered through the bitcoin network. Which will be bypassing traditional financial intermediaries. New networks that are currently unthinkable will come to existence and emerge to meet society’s needs and necessities more cheaply. Assuring them the transaction safety and security.
Question is will the governments, financial institutions and the legal institutions embrace the blockchain? And what would happen to those who don’t?
Understanding the Working: How does a Blockchain work?
One thing that is certain is the power associated with the blockchain. Which has rapidly boosted the increase in its popularity globally. As aforementioned, it’s a distributed ledger that is open for all, anyone with an internet connection. Once a data has been put inside the blockchain, then it’s very difficult to change the data inside. You must be wondering, how would that work?
Let’s delve further into the technology, to gain a better understanding. Consider a block, each of the blocks carry specific data in them. Also they carry in them, the hash of the previous block as well as the hash of the block. The data that has been stored in the block will depend on the type of blockchain.
For example: A bitcoin blockchain, carries in it the transaction details, such as the sender, the receiver and the amount of transaction & coins.
| What is a Hash?
A hash can be compared with the fingerprint, as a hash identifies a block and its contents. One thing to remember, hash is always unique (same as the fingerprints). As soon as a block is created its hash is calculated. Changing something inside the block, will also cause the hash to change. That is a unique property. So in other words, hashes are important in case of detecting the changes in the block. Once the fingerprint of a block changes, it will no longer be the same block.
The hash of the previous block is the third item, which is inside the block. This creates a chain of blocks, which is the technique that helps in creating a blockchain and keeping it together and also make it secure.
Though using hashes is not always that important and enough to prevent the tampering. Computers these days are fast and will easily calculate thousands and even hundreds of thousands of hashes per second. You can tamper a block and recalculate all hashes associated with other blocks to make this blockchain valid again.
For lessening the gravity of this situation, blockchains have “proof-of-work” as their rescuer. Proof-of-work is the working mechanism that slows down the process of a new block’s creation. In case of a bitcoin, it will take you up to 10 minutes to calculate the required proof-of-work & induct a new block in the chain. Proof-of-work makes it difficult to tamper with the blocks. As in case you tamper with one block, you’d be required to calculate the proof-of-work for all the blocks to follow.
So the proof-of-work and the hashing use, is where we get the security in our blockchains. Another way that is used in the blockchain technology in order to secure themselves, is by them being distributed.
Blockchains use the peer-to-peer network rather than using an entity (central) to manage the chain of blocks. Since it is a peer-to-peer network, anybody is allowed to join the network. Whenever someone joins a network, he will be getting a copy of the entire blockchain in that network. And the node can use this to verify that everything is in order.
Even if someone creates their own block in network, that newly created block will be sent to everybody in that particular network. Afterwards, each node will verify the block to ascertain the block’s not tampered with. And when everything will be checked out, each node will be adding the verified block to their own blockchain.
All the nodes in the network will create a consensus. They will agree about the blocks that are valid and that aren’t. The tampered blocks will of course be rejected, by the other nodes in the network. For tampering with a blockchain, you will be needed to tamper with all of the blocks present on the chain. Then recalculate the proof-of-work of each block, and take 50% control (or even more) of the peer-to-peer network. Only then the tampered block will be accepted by everybody present on the network. Which in my honest opinion seems impossible to be done, successfully.
The blockchains, also evolve time after time. And one of the recent developments is the smart contracts
. Smart contracts are the programs stored on blockchain. They can be used to exchange coins automatically based on conditions. Well smart contract is a topic of later to be discussed, and we will be doing it sooner.
The creation of this technology has gained interest of people all over the world. People are realizing with time, the fruitfulness of this technology. And this can be used for other things like storing the medical records, creating a digital notary, and even collecting taxes.
So now you acquired the knowledge of what a blockchain is, how a blockchain works on basic level and what problems do they solve.
Industries to embrace Blockchain technology?
Blockchain without any doubt is one of the most promising technologies in the recent days and for the future. IBM had predicted by 2017 ends, 15% of the banks will embrace and use the blockchain technology. Here we will be talking about the technologies, and fields where blockchain can make an impact or already is.
Industries, disrupting by the technology:
These are the industries that are seemed to be disrupted and affected by the recent popularity of this technology:
The blockchain technology can give people access to financial services, including the people of third world countries. Bitcoin allows anyone to transfer money across the globe within a span of seconds. Banks like Barclays, are working on adopting the blockchain technology in order to boost their business operation speeds, and make them efficient and secure.
Over the months, there has been a significant increase seen among the banks and their investments in blockchain startups and projects.
As we know the ledger of this technology is public, however the data is verified and also encrypted (that involves cryptography of an advanced higher level). Which secures the data, from being hacked changed without the authorization.
Supply Chain Management:
With this technology your transactions are documented in a decentralized record (permanent) also monitored securely. Resulting in reducing the time delays faced & the human errors. This will essentially help in understanding also controlling the environmental impact of products. By tracking the products from their origin, it can also authenticate the fair trade status.
Blockchain is promising enough to change and evolve the entire approach to research, analyzing and forecasting. There are efforts recorded to be creating a decentralized global prediction markets. This will be helpful in placing bets on anything be it sports, or stocks, or even elections.
Networking & IOT:
Huge companies, such as Samsung & IBM are working on creating centralized network of IOT devices, which operate like a public ledger for a large number of devices. Which will be eliminating the need for a central location to handle the communications between them. Devices will be empowered to communicate with each other directly enabling them to update software, manage the bugs and also monitor the usage of energy.
Since we all know the Insurance Market is rooted on the trust management. Blockchain however, is a newer, efficient and reliable way of managing trust. It can be used to identify many kinds of data in the insurance contracts.
Blockchain can also be used to develop a decentralized app (peer to peer), allowing car owners and users to arrange the terms & conditions in a secure way. Eliminating the third party provider requirements. The creation of e-wallets can allow car owners to automatically pay for parking highway tolls and electricity top-ups to the vehicle.
The data that is present on a centralized, is vulnerable to hacking, loss of data and human errors causing disasters. The use of Blockchain technology in the cloud storage will it make it safer and robust against hack attacks.
The common problems and troubles that we see in charity is the inefficiency and corruption happening globally. That is preventing the money from reaching those who are in need of humanity’s aid. This technology can be used in tracking the donations, assuring you that your money is ending up in the right hands.
Voting is one of the most important areas of society that the blockchain will disrupt and affect. Many places globally, we see the political contesting parties rigging the elections, or being accused of rigging the rights and trust of people to vote. The blockchain technology can be used for the voter registration, verification as well as the counting of votes. That will ultimately ensure that only the legitimate votes are counted and no votes are changed or removed. Creating an immutable, publicly viewable ledgers of the votes recorded will result in fairer elections and democratic.
The above mentioned are 10 of the many industries that will be benefited by the advancements of blockchain in that prospect. Evolving them to a newer height, and benefiting the people more than ever before. It’s about time we see people endorsing, and embracing this technology of the future, as later on we will have to do so willingly or not.