Here’s a question for you! Just a generic one. Do you stay updated about the finance or investment sector?
If your answer is a Yes, then you must have come across the term “Blockchain”. Even if you have never heard about this technology, you must be know all about this amazing innovation. So, we are here to tell you everything you need to know about the blockchain technology.
Note: This article is for those who know about this technology and also for those who don’t know anything about it. After all, learning is a never-ending process. Isn’t it?
What is Blockchain?
Blockchain is a new way of storing and moving data. Basically, data is stored in thousands of nodes across a network. In simple terms, it is a shared, digital ledger of financial transactions that are saved on multiple computers in varied locations. New transactions or ‘blocks’ are added to it, which leads to the growth of the database. It has gained a lot of popularity by being a part of the cryptocurrency network.
The below-mentioned data hints at the exponential growth of this technology and how various sectors are being embraced by it.
Worldwide spending on Blockchain solutions is expected to grow from 1.5 billion in 2018 to an estimated 15.9 billion by 2023. Companies in nearly every industry are rushing to take advantage of the perceived benefits of the blockchain phenomenon and many are seeking to adopt their own private versions of blockchain and cryptocurrency. The financial sector accounts for over 60 percent of the market value of blockchain worldwide in 2018, but the technology has spread to nearly every industry from healthcare to agriculture.– Statista
Let’s head forward and explore other aspects of this technology!
Features of Blockchain
Blockchain has come to be known as a game-changer, owing to its rich features.
Most traditional forms of payments are centralized, which means that there is a central authority that regulates them. But the case is just the opposite with blockchain. In this case, the information is not stored by a single entity. Everyone in the network is the owner to the information and can also access the transactions but cannot change it.
Blockchain technology uses cryptographic hashes. Once something has been entered into it, no one can fiddle with the information. Transactions are taken as inputs, run through a hashing algorithm that generates an output of fixed length and size. Each hash can identify a large set of calculations or a data string.
Blockchain technology is a great provider of privacy and transparency by hiding a user’s identity behind complex cryptography and only their public addresses can identify them. While the traditional financial system does not offer transparency & privacy, it provides a further boost to Blockchain.
How it Works
Blockchain is a combination of:
- Cryptographic keys
- Peer-to-peer network
- A means of computing for storing the transactions and recording of the network
Private key & public key are the two components of cryptography and these facilitate a successful transaction between two parties. Every individual can use these keys to produce a secure digital identity reference. This identity is known as ‘digital signature’ and is used for authorizing & controlling transactions.
Digital signature and peer-to-peer network are merged. A large number of individuals use the digital signature to reach a consensus on transactions. When the deal is authorized by them, it is certified by a mathematical verification. This is followed by a successful secured transaction between the two parties. To put it in simple words, the users employ cryptography to accomplish various digital interactions over the network.
Process of Transaction
Have a look at the process of transactions!
- Hash Encryptions
Blockchain technology uses hash encryption to secure data and the address of the sender & receiver, the transaction, private key details are transmitted via SHA265 algorithm. The encrypted information is then transmitted across the world and added to the blockchain.
- Proof of Work
There are 4 main headers in each blockchain.
- Previous Hash
It is a hash address that locates the previous block.
- Transaction Details
Details of all the transactions that need to occur.
It is an arbitrary number given in cryptography that differentiates the block’s hash address.
- Hash Address
A hashing algorithm runs all the above and this is known as the hash of the block.
Is Blockchain Private?
The contents of the blockchain can be viewed by anyone, but the users can also go with the option to connect their computers to the blockchain network as nodes. With this, their computer receives a copy of the blockchain that is updated on the addition of a new block.
The most outstanding feature of blockchain technology is that there are thousands of copies of blockchain and there is no single or definite account of events that can be modified or manipulated. And this saves the platform from being hacked because a hacker would need to manipulate every copy present on the network, which isn’t that easy. Also, personal information about the users is restricted to their digital signature or username.
Is Blockchain Secure?
Blockchain renders security in a way that every new block gets stored linearly and chronologically, which means it is always added to the “end”. Once the block has been added, it is very complex to go back and modify the content of the block. Each block has its own hash along with the hash of the block that falls before it. Hash codes are created by a math function and a hacker will find it pretty difficult to edit your transaction.
Blockchain holds the capability to help businesses make accurate and efficient operations. Now, we have to see whether the centralized system continues to maintain its position in the market or blockchain will take over everything in the coming years. The answer lies ahead in time.
If you are planning to make it big in this domain, let’s connect!