What is Blockchain Technology?
Blockchain- a word we all must have heard at least once, but don’t know much about the same. There always remain a few questions that need answers: What is blockchain and how it is revolutionizing different industries and taking them ahead from their competitors. In this blog, we will explain about the blockchain technology and why it is becoming the future technology.
A blockchain is defined as a decentralized and trustworthy digital ledger for economic transactions that can be automated to keep an account of not just financial transactions but almost everything of value. It’s an increasing list of records, termed as blocks, which are connected using cryptography. Each block encompasses a cryptographic hash of the earlier block a timestamp, and transaction data.
In simple terms, blockchain is a time-stamped series of incontrovertible record of data that is managed by a bunch of computers not held by any single unit. Each of these blocks of data is protected and bound to each other via cryptographic principles (i.e. chain). The blockchain is an unquestionably creative invention — an idea of a person or group of people known by the fictitious name, Satoshi Nakamoto.
Now, the next question that confronts most of us is what is so special about blockchain technology and why it is becoming popular? So, here’s the answer.
Why Blockchain is becoming popular these days?
The blockchain network has no central authority which makes it the very definition of a democratized system. It acts as a decentralized system for recording and verifying transactions that take place relating to a particular digital currency. There is no chance of corruption as there is no governing body to control. It is a shared and unchangeable ledger, the information it contains can be accessed by anyone and everyone. Hence, anything that is made on the blockchain is transparent and everyone involved is responsible for their actions.
No transaction cost involved
Surprising but true! Blockchain brings no transaction cost. It only involves an infrastructure cost. The blockchain offers a simple yet inventive way of transmitting information from one source to another in a fully automated and safe way. One person to a transaction begins the process by forming a block. The block is verified by thousands or maybe millions of computers spread around the net. The verified block is then added to a chain, which is saved across the net, leading to the creation of not just a unique record, but a record with a unique history. Forging a single record would mean forging the entire chain. Although practically impossible but bitcoin uses this model for monetary transactions and it can be deployed in several other ways.
Safe and difficult to hack
Any new blocks that are added to the blockchain are always stored linearly and chronologically, that is, they are always added at the “end” of the blockchain. After adding a block at the end of the blockchain, it becomes very difficult to go back and change the content of the block. Because each block holds its own hash, together with the hash of the block before it. These hash codes are created by a math function which changes digital information into a cord of numbers and letters. If anyone tries to edit the information in any way, the hash code changes. Thus, making it secured from hacking. If any hacker tries to change a single block, he needs to change each block after it on the blockchain. Recalculating all those hashes would take a huge amount of computing power. So, once a block is added to the blockchain it becomes very difficult to edit and almost impossible to erase.
Smart contracts are generally seen as a powerful application of blockchain technology. These contracts are computer programs that can run and manage all facets of an agreement, from facilitation to execution. Agreements can now be made, validated, signed and enforced automatically, thereby saving the company’s money. When conditions are fulfilled, smart contracts can be fully self-executing and self-enforcing. It provides a more secure and more automated substitute to traditional contract law as well as its application is faster and economical than traditional methods.
Single Public Chain
In the Bitcoin system, the blockchain is shared, agreed upon and maintained by a public network of users. When people join the network, their linked computer receives a copy of the blockchain which is updated as and when a new block of transactions is added. The blockchain procedure discourages the presence of multiple blockchains through a procedure called “consensus.” The consensus protocol is one of blockchain technology’s greatest strengths
So, now that you know some of the best features of the blockchain technology which makes it the preferred choice of many industries, now in the next blog we will provide how this technology is affecting the different industries and the potential it carries to bring out the disruption in these sectors. The predictions for blockchain technology across many industries are infinite. The popularity and its applications will increase with the increasing number of startups and enterprises embracing this new form of tech.
At Spark Eighteen, we offer the complete infrastructure for creating and deploying blockchain run applications. We also provide free consultation on blockchain implementation. To know about blockchain development in India, connect with us today.