What is all about Blockchain Technology?July 3, 2019 2019-07-03 11:45
What is all about Blockchain Technology?
Ten years ago, Blockchain was combined with other innovative technologies for the purpose of generating cryptocurrencies, beginning with Bitcoin, the first Blockchain-based cryptocurrency. This was the first instance when Blockchain was successfully integrated and executed. Mr. Alex of Blockchain Research Institute, who authored Blockchain Revolution 2016, states that “Blockchain is a trustworthy digital ledger or a distributed database that keeps track of transactions and can be programmed to not only record financial transactions but also everything else that has a worth”.
In layman’s terms, Blockchain is an encoded, dispersed database that records data similar to a computerized record of any exchanges, transactions, contracts, etc. One of Blockchain’s major highlights is that it’s a computerized record that’s widely available widely over a large number of PCs. This means that Blockchain is accessible across a plethora of computer systems and doesn’t need to be tied down to a single place. Blockchain has started impacting the financial and technical sector drastically, n by means of digital currency like Bitcoin, smart contracts, and other innovative and revolutionary applications.
Blockchain is useful for the protected transfer of items like property, money, contracts, etc. without any third-party intermediary like a bank or government agency. Once the information is recorded inside a Blockchain, it is impossible to change it, thanks to its immutable features.
All the information in it is chronologically stored and typically is not handled by any of the central authorized organizations. Blockchain technology becomes a valuable tool in the economic sector as the users directly access and carry on transactions without the involvement of any third party. Such transactions are carried out securely by encrypting user information. The primary benefit of Blockchain technology is that it seldom faces the issues of a data breach.
Why There is So Much Hype Around Blockchain Technology?
There are plenty of claims regarding Blockchain’s actual potential. The distributed ledger database has been regarded as a game-changer, with many individuals staking their reputations and fortunes on it. Claims have been made about its ability to aid in increasing transparency in the health and manufacturing sectors, as well as reducing fraud for enterprise applications such as financial systems or for that matter, any system involving centralized control. Actualizing Blockchain innovation in the thriving shared economy could diminish the requirement for focal control.
Blockchain proves its capability by bringing simplicity and immutability to the process of accessing information. The potential for smart contracts, as well as the opportunity to make new business models, should inspire business heads to review the fundamental aspects of their business in the context of Blockchain. Features like trust, immutability, privacy, and reliability make Blockchain appropriate for every industry. Blockchain technology is going to be a relevant subject of conversation for many days to come.
How Does Blockchain Technology Work?
In simple words, you can think of Blockchain as a Google spreadsheet that is shared by a huge number of systems all across the globe. The spreadsheet is connected to the internet and every time a transaction takes place, the details of it get recorded in the rows of the spreadsheet. Anyone with a computer or mobile device can access the spreadsheet after connecting via the internet. Also, everyone accessing the spreadsheet can view or add transactions in the spreadsheet, but cannot edit the information already present in it.
Let’s Recall a Few Important Features Before We Get Into the Details
As mentioned prior, Blockchain technology maintains a record of entire data exchanges. In the world of cryptocurrency, transfer of each information, property, etc is called a ‘transaction’, while the data where all transactional records are stored is called a ‘shared ledger’. Each completed transaction is included as a “block” in the ledger.
Every transaction is confirmed using a distributed system — a peer-to-peer network of nodes. It also uses the consensus algorithm model for transactions. The consensus model consists of specific objectives that are used in Blockchain to create equality and fairness in the online world. Here are some of the objectives of Blockchain’s consensus model:
- Coming to an agreement
- Equal Rights
Once the digital transaction happens and it is added to the distributed ledger, it becomes almost impossible to alter the data at a later time.
To start with, we need to unfold the theory of “keys”. You are provided with a set of cryptographic keys for your identity. One of the keys is called the private key and the other is the public key. They are combined together to give you a digital signature.
Your public key is like a notice, with which others can recognize you. The private key gives you a digital identity to authorize a transaction. However, in order to authorize any complete Blockchain transaction, you have to use both private and public key jointly.
In the cryptocurrency world, the wallet address (public key) signifies you, and your private key helps you to authorize transfers, withdrawals, or carry on other actions with your digital property such as cryptocurrencies. Hence, it is imperative to protect your private key or else anyone who can access it would have complete authority to corrupt any of your r digital assets that are associated with the public key.
Whenever a transaction happens, it is by default authorized by a person who has a private key. For instance, in the transaction “Bob is sending Rex 0.4 BTC”, he adds Rex’s address (public key), and puts in the digital signature using both private and public key.
This transaction is updated in the Blockchain ledger as “Bob sent to Rex 0.4 BTC”, and it is given a unique ID number and timestamp to indicate the time the transaction occurred. As this transaction occurs, it’s transmitted to a peer-to-peer network of nodes, essentially other digital entities that acknowledge that the transaction has occurred and thus it should be added to the ledger This alerts other digital entities to the completed transaction and suggests the same be updated in the digital ledger.
How Do You Learn Blockchain?
Through this software, people can add Blockchain to their programming skillset. The best part of this approach is that there’s no need to learn to code before learning this technology. Thus, an interested neophyte can learn Blockchain and use it eventually for either personal or professional purposes.
A better approach to learning Blockchain is to find the important fundamentals that are driving this global phenomenon. After all, this is a revolutionary technology that can change one’s life significantly, and entering the world of Blockchain technology can render long term dividends. But still, one has to be very cautious about how to initiate it.
By now, you might be thinking of the easiest way to begin your journey in the Blockchain space. Well, if you are a beginner, there are certain basic terms that you need to know, like :
- Blockchain-It is generally a chain of blocks. Each block contains some sort of value or data that is cryptographically stored in it without any central supervision.
- Decentralized and Distributed Ledger- A system that is not governed by any central authority.
- Consensus mechanism-This is a method in which a decentralized network comes to a consensus on some specific objectives.
- Miners-The users who use their systems to mine for blocks or authorize them.
Apart from the aforementioned terms, you should also be aware of the studies in computer science fields introduced to Blockchain technology. These fields are categorized as Cryptography, Distributed Computing, and Mechanism Design.
Cryptography refers to the study of finding ways to establish secure communication between computer systems.
To know the magnitude of cryptography, here’s a stat – a piece of information in Bitcoin cryptography can secure a value as high as $300,000,000,000. This digital trend will continue to surpass the more traditional methods of how our society makes safe the information or properties that we consider valuable.
Cryptography is an important part of Blockchain, because the private and public keys are cryptographically encrypted, making it nearly impossible for anyone to hack them. Therefore it is recommended that you learn cryptography before learning Blockchain.
Bitcoin designed the first useful distributed trusted network across the world by introducing techniques like digital signatures, one-way functions, distributed computing, mechanism design, etc.
Before the release of bitcoin, torrenting websites were the only thing that could be considered comparable to globally distributed peer-to-peer network nodes. Although many of these websites were fairly good, they missed rendering proper incentives for people to work ethically and accurately within the network. Anyone could post anything without any consequences, things such as malicious software or subject matter that violated copyrights. Also, there were no rewards for uploading quality information.
Mechanism design is yet another confusing part of Blockchain technology that is nevertheless extremely important. A cryptographer alone may protect the information, but there has to be some incentive for owning that information. For it to have any worth (and to prove it may not be double spent), a distributed computing engineer might connect a network of computers in order to spread information.
However, if there is an imbalance in the incentives created, it makes for a lesser safe network such as the aforementioned torrenting sites. Mechanism design eliminates these issues and provides a safe working space for Blockchains.
Although Blockchain is a decentralized technology, the advent of miners, mining, and building blocks has challenged the basic idea that Blockchain a decentralized network. This is where the nature of mechanism design can help in securing the digital assets and can provide you with a great platform before learning Blockchain.
Though Bitcoin is the most successful implementation of Blockchain technology, it has much wider and greater potential than just cryptocurrencies. It might be a new technology for some people and organizations, but it’s on the verge of creating a revolution in the world of technology and finance.
While some industries have started using Blockchain in various sectors, there are plenty of others who are only now finding out the possibilities. Many applications are being tried and tested each day, adding to this exciting technology. And once these applications are made live for the global audience, Blockchain will reshape the technology and lives of the people for good.
So, what are you waiting for? If you are intrigued by Blockchain and its applications and want to make your career in this fast-growing industry, then this is the right time to learn Blockchain and gear up for an exciting future.