Blockchain

 Blockchain:

Blockchain are incredibly popular nowadays. But what is Blockchain? Like the name indicates, a blockchain is a chain of blocks that contains information. This technique was originally described in 1991 by a group of researchers and was originally intended to timestamp digital documents so that it is not possible to backdate them or to tamper with them. However it went by mostly unused until it was adapted by Satoshi Nakamoto in 2009 to create the digital cryptocurrency Bitcoin. A blockchain is a distributed ledger that is completely open to anyone.

A simple analogy for understanding blockchain technology is a Google Doc. When we create a document and share it with a group of people, the document is distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the document at the same time. No one is locked out awaiting changes from another party, while all modifications to the doc are being recorded in real-time, making changes completely transparent.

Blockchain have an interesting property ,once some data has been recorded inside a blockchain it becomes very difficult to change it.

In technical terms blockchain is defined as a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.

A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralised database managed by multiple participants is known as Distributed Ledger Technology (DLT).

Why is there so much hype for blockchain?

There have been many attempts to create digital money in the past, but they have always failed.

This issue is because of lack of trust. If someone creates a new currency called the ”ABC” dollar, how can we trust that they won't give themselves a million ”ABC” dollars, or steal your  ”ABC” dollars for themselves?

Bitcoin was designed to solve this problem by using a specific type of database called a blockchain. Blockchain is different because nobody is in charge, it’s run by the people who use it. What’s more, bitcoins can’t be faked as well as hacked, so people that own this money can trust that it has some value.

Working of a Blockchain:

 Some people request a transaction. The transaction could involve cryptocurrency, contracts, records or other information.The requested transaction is broadcasted to a P2P network with the help of nodes then network of nodes validates the transaction and the user’s status with the help of known algorithms.Once the transaction is complete the new block is then added to the existing blockchain. In such a way that is permanent and unalterable.

Why do we need Blockchain?

1.Transparency - all information about currency exchange is available to everyone.

2.Security -Any industry that has a critical need to protect sensitive data such as governments, healthcare, financial services, etc., can use blockchain to enforce stringent security.

3.Traceability -  Helps to verify the authenticity and prevent frauds.

4.Cost Reduction- As blockchain eliminates the need for third-parties and middlemen, it saves enormous costs for businesses. 

Conclusion:

As blockchain rises far and above our perceived challenges, it will be put together with the Internet of Things to create trust between parties, reduce the risk of tampering, lower costs by removing intermediaries, and accelerate the pace of settlements from days to almost instantaneous.