What is Blockchain – Why is it among the top innovative technologies

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Blockchain is a distributedledger, in which databases are shared, reproduced, & are synchronizedamong the particiapnts of network whichis decentralized. It is useful to maintain a permanent & hack-proof or tamperproof transaction of data.

That’s a lot of technical stuff on one strike. Let’s start it from the very basic of “transactional data”, after all it is a big ‘deal’.

The transaction in the world we are aware of is possiblebecause of the presence of intermediates. Intermediates for examplebanks or the government facilitates the transaction of goods and services bycreating trust and certainty.

EXAMPLE 1. Electronic payment:-

While using a credit or debit card for transaction to the third party intermediaries, the bank approves, track and record the transaction for each party in their private accounts.

EXAMPLE 2. Real estate:-

When an individual buys a new property, government keeps the record of the change in property ownership and manages the real estate distribution.

So what’s the problem there?

The time for regulating and recording the data that governments and the banks consume , often delays and impede the flow of business and being the centralized authority to manage these records, there is possibility of the data being hacked or corrupted.

Applications of Blockchain Technology

Let’simagine the world without intermediates, where in the place of government orbanks, we have a technology that provides the same experience, direct businessto business or peer to peer, without giving room for delay neither compromisingthe security aspect. So welcome to the world of ‘BLOCKCHAIN’.Block is basically a store where the details of each transaction are included,say the date, name , the amount of money that has been transferred. Each blockstores information that distinguishes from the other block through a uniquecode with unique history of transaction. Then the block is verified bythousands of computer around the net. Once the sequence of the transaction isover, it goes into the blockchain database permanently. The data being managedby cluster of computers and decentralized, it is practically impossible tofalsify a single record. Blockchain is a simple and automated way of passinginformation securely.

Blockchaintechnology does not contain any transaction cost challenging all those businessmodels that rely on the tinch of money for the process of transaction. Forexample, we buy tickets for travelling through railways, we buy it online. Thecredit card company cuts the brokerage fee for processing the transaction. InBlockchain technology, the broker is being eliminated here, and there isa direct link of the railway company to the passenger for the transactionpurpose and we save the processing fee. That’s how the third party has beenexcluded. The ticket works as a block which has unique identity and is added tothe ticket Blockchain. Hence, just like the ticket Blockchain contains all therecords of the transaction, that is, a particular journey, or the records ofentire train networks, every route ever taken. And falsification of any onticked would question the entire network, well that’s a chimera. Anotherexample would be cutting out the charges that we pay for buying a book online,and rather than paying to the mediator, the money directly goes to the writer.The books would propagate in encoded form & a blockchain transaction would sendthe money to the author & unlock the book. Then the market place would beinessential for online purchasing books.

So in away, Blockchain could change the method of maintaining records, and almostevery void  financial institution will bereplaced by Blockchain technology.

As explained earlier, Blockchain system comprises of two types of records- transaction and blocks. These transactions are the process carried out in a particular period and stored in a block. Every block is given an unequaled cryptographic hash that links to the previous transactions linking them to a compact string.

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Cryptography in Blockchain

Now Cryptographic hash Or Cryptography is a significant aspect of the system that needs to be explored. It’s a technique to convert the actual text into encrypted text that makes it difficult to manipulate the information. It’s the use of mathematical formula to create a secure distributed ledger which unables the third party to intervene. It secures the data and maintains the transparency of the transactions with providing privacy to the individual users.Cryptography warrants guarding data through complex computation logic rather than keeping it just safe.
As we are aware, in Blockchain every transaction is propagated between nodes of networks, in a peer-to-peer form so that, no one knows the origin of the transaction.
Blockchain uses advanced level encryption so that it can be completely secured.

So it isclear till now that:-

?Blockchainis not owned by a single entity, hence it is decentralized.

? Thedata is cryptographically stored inside.

? Blockchainis immutable, and can’t be tampered to access the data inside the blockchain.
?The blockchain is also transparent to track the data whenever we want to.

Why blockchain is considered amongtop technologies?

“Blockchain is expanding its application scope beyond banking and financial institutions into a wide range of use cases across industries; the global funding to blockchain startups since 2014 is noted to be in excess of $1 billion.”

Frost and Sullivan TechVision Program manager, KiranKumar.

Theelegance of blockchain is that it obviates the need of authority to verifytrust and transfer of value. Decentralisation, transparency and immutabilityare the three pillars of that sets the technology apart from any other system.

Decentralisation

Beforethe emergence of Bitcoin, the world operated through a centralised authority towhich one has to look up to solely for extracting any information. But theseautonomous authorities have several vulnerabilities.

  • Whenthe data is stored at one spot, it is easier for the hacker to have illegalaccess to it and high probability of the data getting corrupted.
  • Ifthe central system has to be upgraded, it disrupts the whole process ofbusiness.
  • Thetrust on the single entity holding the entire data is highly risky of theentity being jeopardized.

What thebenefit of network being decentralised is that everyone in the network owns theinformation.

Immutability

It isthe ability for a blockchain ledger to remain unalterable and indelible historyof transactions. It means once data has been written to a blockchain no one,not even a system administrator, can change it.Its beneficial for databases offinancial transactions. The cryptographic hash function is the reason of itsidiomatic characteristic of this technology.

  1. The system inputs actual data and outputs encrypted string of numbers and names that serve as a digital signature.
  2. A minute change in the file results in a drastic change in the output.It is called the “Avalanche Effect.”
  3. The process is irreversible, I.e., it’s not possible to work backward from an output string to determine the input data.

But thequestion arises, if the data is encrypted, how blockchain can be regarded astruly transparent?

Transparency

Thetransparency, that has never existed before, of a blockchain stems from thefact that the holdings and transactions of each public address are open toviewing. Although the person’s real identity is hidden through cryptographiccapabilities, one can still see all the transactions that is done by theirpublic address.It is in this way that blockchain gives large businesses aplatform to act with genuine integrity towards their community and customers.

With this much of transparency anddecentralised management, the individuals on the network would be empowered.One could run systems that aren’t possible in the current setup. Blockchainwill do to Technology what the Internet did to Communication.  

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