Just like how open source software had a major impact in the world of Information Technology some twenty-five years ago, the rise of Blockchain Technology too can be thought of the same. Just like how Linux took more than a decade to become the most widely used tool in the development of modern-day applications, Blockchain will also take time to become economically available for users worldwide.
Blockchain technology carries along with it a host of new possibilities and brings in a completely new method of information daring. With major companies roiling out rather big ventures and real-world products, it is safe to say that the Blockchain technology revolution is slowly starting to take shape. Experts do stress that blockchain technology is not completely out there to replace already existing business systems, rather it is a promising technology which carries along with it the potential to create newer foundations surrounding economic and social systems.
The hype surrounding the technology is at its peak, but despite this, the technology is expected to be adopted rather slowly and steadily. However, the potential it carries with it is mind-boggling.
This article is a beginner’s guide to what the technology is all about.
What Do You Mean By Blockchain?
Blockchain can be referred to as an electronic form of a public ledger which is very similar to that of a relational database which can be easily shared amongst different users and provides a seamless record of all their completed transactions, stamped each time and they liked to the previous transaction. Such a single unit of transactional record in the huge threads of records can be referred to as a blockchain. This technology allows only a certain set of users to participate in the electronic ledger and each block is a representative of a specific contributor.
- Data can be entered into every block only after mutual consensus is established between the users and once it is entered, the data cannot be altered in any way whatsoever.
- It hence becomes a true and verified record of all the transactions made in the system.
- The updating of Blockchain can only take place by consensus between participants, and it won’t be eliminated when new data is added.
- It will consist of verifiable and true record of each of the transactions ever made in the system.
Potential of Blockchain Technology
The new-found technology has tremendous potential, but it is still in its early years and it should come as a surprise to various firms around the world who have adopted the technology, that there have been setbacks with the technology. It is also volatile in many ways.
Rise of Ethereum
To explain this, let us take the example of Ethereum, which is one of the most prominent blockchain relevant platforms. The system doesn’t allow the usage of decimals in its raw script for self-executing contracts, or simply known as smart contracts. Hence, entities who are responsible for coding a blockchain network would have to create alterations and provisions to the existing code for better comparability to their systems.
Tremendous amounts of efforts are being put in to come up with a blockchain software which is highly customized and standardized. To support this fact, there are more than two hundred different kinds of start-ups who have been working on their unique versions of the modern day distributed ledger technology.
Why Is Blockchain Technology So Famous?
The question may arise, why is blockchain technology so famous lately? The answer is simple, The rise of the mighty Bitcoin. Bitcoin is nothing but a digital-based cryptocurrency which can be used as digital money and can be transacted over an open network using bits and encryption. It is the world’s very first decentralized digital currency and was introduced to the world in 2009. There are a host of other types of cryptocurrencies that have sprouted up and are being used for cross-border financial transactions. For more information on the different types of cryptocurrencies available in the market out there, visit Crypto Coin Judge.
What Exactly Does Blockchain Do?
It is a form of a p2p network which comes along with a time stamping server. The database can be managed autonomously to exchange information between the concerned parties. Hence, the concept of a system administrator is not valid in case of blockchain technology. Rather, it is the users who themselves are the administrators.
The technology network can be used in the implementation of “Smart Contracts” or certain scripts which will execute themselves automatically only when certain pre-set conditions are met. For better understanding, let us use the example of Ethereum. Ether’s exchange makes it mandatory for its users to meet a bunch of pre-set conditions. Post this, thee users will have to prove that they own the cryptocurrency and have the authority to send the claimed money. Along with this, multiple blockchain technology users can come up with contracts which will require more than one set of unique inputs to initiate a transaction.
Security Features of Blockchain Technology
While no system in the world is immune to threats, it is safe to say that Blockchain technology is one of the most secure in the world. To initiate a transaction or a movement of anything valuable over the blockchain, the node network must first affirm that the transaction is valid. Hence, no one node can single-handed control the transaction. Hence, in order to hack into a blockchain network, a hacker would have to hack into every single computer connected to the blockchain network and this is some cases is just not humanly possible.
The number of computing resources needed by a single network is mind-boggling. For example, the BITCOIN blockchain requires more than ten times as much as computing power as compared to all of Google’s server farms put together. Hence, many the better when it comes to security.
What is the Basic Classification of Blockchains?
Traditionally, there are three types of blockchains.
Private and Public Blockchains
One is private blockchain while the second one is public blockchain. Blockchains which are public, allow all of its users to see or send transactions over the network. However, this is only possible for as long as they are part of the consensus process.
There also exist consortium blockchains, where the only certain number of authorized nodes can access and use the ledger. For example, Consider a group of prominent banks. They, along with their clearinghouse can make use of blockchain technology as part of their trade clearing process. Here, each node will be treated with a unique step in the overall verification process.
However, Private Blockchains pose restrictions on the ability to write to a ledger of an organization. Such as between a group of employees within a corporate setup, or between a pre-set number of organizations.
In the whole process, due to its peculiar nature of self-policing security, Blockchain technology eliminates large amounts of bookkeeping which can be a little confusing especially when the complexity of the network increases and more and more parties are involved in a single transaction.
What Type of Industries Utilize Blockchain Technology?
The blockchain is a very versatile form of technology. It has managed to find applications in Fintech, health care, Energy, Capital Management, etc. to name a few.
Let us understand this with the help of an example. The world’s largest container shipping service provider, Maersk, has replaced the traditional means of container ledger and tracking system which was mostly paper-based and required multiple signatures by inspectors and multiple administrative authorities in order to ensure smooth delivery of the containers, with a blockchain technology based ledger and container tracking system. It is going to use this newfound technology in order to completely digitalize the entire supply chain of the company, thereby ensuring a more efficient and hustle free container delivery process.
Ever user who is part of the shipping supply chain can view where a certain container is and can even track it. They can also access information such as the status of documents and other data in real time.
Blockchain Technology and Cryptocurrencies
While the hype surrounding blockchain technology Is high, the hype surrounding cryptocurrency is even higher, because it is an unregulated and highly decentralized form of digital currency.
When it started off in 209, BITCOIN was valued at a few hundred dollars per unit, and today its worth several thousands of dollars per unit, thereby making meager investors into overnight millionaires.
Blockchain Technology and ICOs
The fact that the currency is backed by blockchain technology makes it even more appealing. Several Blockchainstart-ups too have started their own tokens which they sell to the public during an ICO campaign. An ICO campaign is nothing but a blockchain powered crowdfunding method for modern day start-ups. In order to gain an insight into what ICOs are and to read up on the most famous ICO campaigns currently active, check out this ICO website
The future of blockchain technology is rather uncertain. However, it is safe to say that the technology is heading towards the right direction and carries the power to completely revolutionize the world we see today.