Blockchain technology was invented by Satoshi Nakamoto in 2008 as a public transaction ledger of cryptocurrency bitcoin. Thus the users were allowed to control their own money without a third party to access or monitor it. Though the possibility of blockchain technology was limited in the bitcoin application at the time of its invention, its potential use in a variety of applications like security, online voting, etc. was explored.
Block Chain Technology
What is Blockchain?
A blockchain is a time-stamped series of immutable records of data that is managed by a cluster of computers not owned by any single entity. To understand blockchain we need to understand Cryptography and Distributed ledger.
What is Cryptography?
It is a method of protecting information and communications through the use of codes so that only those for whom the information is intended can read and process it.
What is a Ledger?
It is a kind of database where confirmed transactions are recorded.
What is Distributed Ledger Technology?
It is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
We can define a block chain as a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Through a block chain, digital information is being distributed instead of just copying. This technology was originally devised for the digital currency, Bitcoin. But now the tech community is about to explore its immense scope and potential uses.
“The block chain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value”. – Don & Alex Tapscott, authors Blockchain Revolution (2016).
PROPERTIES of a Blockchain
- In a blockchain, each of the blocks of data (i.e.block)are secured and bound to each other using Cryptographic principles(I,e.chain).
- The blockchain network has no central authority.
- The information in a blockchain is open for anyone and everyone to see.
- Everyone involved in the blockchain is accountable for their actions.
- A blockchain carries no transaction cost
- Pass information in a fully automated and safe manner.
- Not just information, but anything of value-money, deeds, identities, even votes can be moved, stored, and managed securely and privately through blockchain technology.
- Trust is established through mass collaboration and clever code.
- No role for any intermediaries like governments or banks.
- Brings everyone to the highest degree of accountability.
- Guarantee the validity of a transaction by recording it not only on the main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.
3 Pillars of Blockchain Technology
What is so special about blockchain? Let’s look at the three main reasons why blockchain technology stands to revolutionize the way we interact with each other. There are three main properties that attracted widespread acclaim to this technology and in fact, they are considered to be the pillars of blockchain technology. They are,
- Decentralization
- Transparency
- Immutability
Decentralization
We are more used to centralized services. That is, we have to interact solely with a centralized entity that stored all the data to get whatever information we required. The best example of a centralized system is Banks. In another way, we can say that we have been following a client-server model where all the data is stored in one spot.
But what if this centralized entity somehow shuts down or gets corrupted? How can we blindly depend on a centralized entity?
In a decentralized system, instead of information being stored by one single entity, everyone in the network owns the information.
Transparency
A person’s real identity is not being revealed. It is hidden by complex cryptography and he will be represented with a public address.
Immutability
A blockchain has the ability to remain unchanged, unaltered, and indelible.
Technologies behind Blockchain Technology
- Private key cryptography
- P2P network
- Program (the blockchains protocol)
Blockchain technology is expected to be applied in the following areas in the future.
- Smart contracts
- Supply chain management
- Asset protection
- Personal identification
- Payment processing
- Crowdfunding
Conclusion
The ultimate result of blockchain technology is definitely a secure way of transactions. We can proudly hope that our financial and technological future is going to make use of the benefits of this revolutionary invention.