what is Blockchain? A blockchain is a chain of blocks, a digital ledger of transactions that is shared and distributed across the entire network of computer systems on that blockchain.
Brief History of Blockchain
Do you Know?
Blockchain technology is way older than you think!!
Before the invention of cryptocurrency, Blockchain is used as a web transfer protocol as the peer-to-peer transfer protocol. No one knew about it and no one even cares.
Tell me If I am wrong.
It is just like that if you want to know how to drive care, You need not be an automobile engineer.
it’s a bit of overkill.
well in 1991 blockchain technology is described by Stuart Haber and W. Scott Stornetta
They introduced Blockchain Technology to record timestamp data of sending packets (Packets means a piece of data). which cant be changed.
They develop to develop this system using a concept known as cryptographically way older than you can think of.
Cryptography is introduced in 1982 by David Chaum
but using this technology in cryptocurrency will revolutionize our whole civilization!
What Is Blockchain?
A blockchain is a chain of blocks, a digital ledger of transactions that is shared and distributed across the entire network of computer systems on that blockchain.
Each block in the chain contains some Private data:
- number of transactions
- Unique hash code of the previous block
- record of that transaction
blockchain is decentralized in nature. Managed by its community
The decentralized database is managed by multiple participants of that network community.
Do you want to know How Blockchain works?
How Does Blockchain Work?
In the chain, individual blocks consist of data and Hash as I mentioned in the above section
Let’s understand what is a hash?
- Hash is a encrypted unique key like a biomaric scan
- data is any kind of information it cary for example Bitcoin block contain amount of bicoins that is transeferd
and this information is passed on to the next block of the chain, just like just passing a parcel game.
when the block passes the data to the next block it sends a hash key also and the next block generates its own hash key to pass on.
You may wonder any can hack the blockchain and stole the data
well, it’s too hard to do because
- If you temper the hash or try to change it, the hash value of the next block will be changed automatically.
- secondly, if someone do some changes in system. He or she should need to majority to agree with the change.
Let’s see some of the applications Blockchain
How Blockchain can use?
Blockchain technology is used for various purposes, Like financial reform, banking to asset building
Cryptocurrency is one of the best examples to showcase the value and power of technology.
Bitcoin and Ethereum are the no need for introduction they started changing the economy and truly united the globe.
- No exchange rates
- fast transaction
Give birth to a borderless economy
How can Banks Use Blockchain
Other than cryptocurrency, blockchain is being used to process transactions in paper too currency, like dollars and euros.
This would be faster than sending money through a centralized bank or another financial establishment,
as the transactions can be verified faster and processed outside of normal business hours (The weekends and Holyday).
Asset Transfers (NFTs) with Blockchain
Blockchain can be used to record the ownership of different assets and we can easily transfer that ownership to others. This is nowadays hugely popular with digital assets like NFTs, a representation of ownership of digital art and videos.
Regardless, we can use blockchain to process the ownership of real-life assets, like the deed to real estate and automobiles.
The buyer and seller could first use the blockchain to verify that the seller owns the property and the buyer has the money to buy,
then they could complete the transaction and record the sale on the blockchain. This way no need for paperwork, and can also prevent losing deeds or false documents.
Advantages of Blockchain
Great Accuracy in proccesing Transactions
A blockchain transaction must be verified by numerous nodes, this can decrease error. If one node has an error in the database, the other nodes would see that difference and catch the error quicker
on the other hand, in a traditional database, if somebody makes an error, it may be a higher chance to ignore or overlook the mistake.
In addition, every asset is individually recognized and tracked on the blockchain ledger, so there is no chance of a mistake in it, or the need to audit the transaction could save time and billion dollars.
No Need for Middel athauraties.
Using blockchain, two individuals can confirm and complete transactions,
something without working through a third party like a bank. This saves time as well as the cost of a single transaction
Extra Layer Security
Well, a decentralized network like blockchain makes it basically impossible for someone to make fraudulent transactions.
To enter forged transactions, Haker would need to hack every block and change every ledger on the network.
While this isn’t necessarily impossible.
Most cryptocurrency blockchain systems use proof-of-stake or proof-of-work to verify transaction methods that make it difficult, and the community of a blockchain would reject the harmful attempt to breach the system
More Efficient Transfers
Since blockchains operate 7 days a week and 24 hours, people can make more efficient financial and asset transfers, specifically internationally. They don’t require to wait days for a bank or a government agency to manually confirm the transaction
Disadvantages of Blockchain
Limit on Transactions per Second
Blockchain depends on an enormous network to authorize transactions, there’s a limit to how fast it can move. For example, Bitcoin can only process 4.5 transactions per second versus 2,000 per second with Visa.
secondly, increasing numbers of transactions can create network speed problems. Until this improves, scalability is a challenge.
High Energy Costs
Having multiple nodes working to verify transactions consumes a significant amount of electricity than a single database or spreadsheet.
Not only does this make blockchain-based dealings more expensive due to these external factors, but it also creates a large carbon burden on the environment.
Because of this, some industry leaders are starting to move away from certain blockchain technologies, like Bitcoin: For example, Elon Musk recently said Tesla would discontinue accepting Bitcoin because he was concerned about the harm to the environment.
Risk of Asset Loss
It’s a best Practice that your digital assets are secured using a cryptographic key and 2-factor authentication, for example, a bitcoin in a bitcoin wallet. You need to carefully safeguard this key.
If the owner of a digital asset loses the secret cryptographic key that gives them access to their asset, presently there is no other way to recover it. The asset is gone forever!
Due to the fact, the system is decentralized, you can’t contact a central authority, like your bank, to ask for PASSWORD RECOVERY.
Potential for Illegal Activity
Blockchain decentralization has more privacy and confidentiality layer, which unfortunately makes it more appealing to lawbreakers, criminals, or even terrorists.
Because It’s really harder to track illegal transactions on blockchain than through bank transactions that are tied to a name but in cryptocurrency, you can do money transactions anonymously.
Frequently Ask Quetions
Can blockchain be hacked?
No, Blockchain is virtually impossible to Hack due to its decentralized nature.
Is Blockchain software?
Technically blockchain is not application software. It’s a database. Bitcoin is the pioneer one of the first software which is developed on blockchain
What programing language is used in Blockchain?
Solidity is widely popular to develop smart contracts over Ethereum blockchain