You probably have heard the term ‘Blockchain technology’ with regard to cryptocurrencies. Let me tell you blockchain technology is more than that, and this much-hyped technology has the potential to reduce huge amounts of record-keeping, streamline supply chains, save money, and disrupt IT in incredible ways. If you want to know more about what blockchain technology is, keep reading.
Blockchain technology or sometimes called ‘Distributed Ledger Technology’ (DLT), is referred to as the transparent and publicly accessible ledger. Blockchain has made digital assets unalterable with the help of decentralization and cryptographic hashing.
Blockchain technology allows users to transfer the ownership of digital assets securely with the use of public-key encryption as well as proof of work methods.
Moreover, the blockchain network is maintained through decentralized consensus. Since blockchain operates on decentralization, it cannot be controlled by third parties such as governments and central banks. In other words, the larger the network becomes decentralized, the more secure it becomes.
Put more simply, in blockchain technology; digital assets are distributed instead of copy that makes it a decentralized distribution platform. Since the blockchain technology is decentralized, it allows real-time access to users that make it transparent. Blockchain technology is a transparent ledger that creates trust in digital assets.
Blockchain technology is basically a combination of 3 key proven technologies: internet, protocol governing incentivization, and private key cryptography. These technologies have made Satoshi Nakamoto’s idea of Bitcoin so valuable.
History of Blockchain Technology
The history of blockchain is relatively new and interesting. Multiple events took place in the development of blockchain technology.
As we know, behind the Bitcoin network, this blockchain technology is operational. In 2008, it was invented by an anonymous individual or group called ‘Satoshi Nakamoto.’ Later in 2009, the very first Bitcoin transaction was made by Nakamoto using blockchain technology.
In 2014, this distributed ledger technology was separated from cryptocurrencies due to its huge potential for transparent transactions in other sectors. This technology is referred to as blockchain 2.0 as it can be applied beyond cryptocurrency.
How does it Work?
Blockchain technology entails three key concepts, including blocks, nodes, and miners.
● Blocks
In the blockchain, blocks are actually the digital pieces of information that store information about transactions like time, date, amount of dollar, users with their digital signatures. Each block contains a unique code known as ‘Hash’ (specific cryptographic codes).
● Miners
Miners create new blocks through a process known as mining. This process uses special software to solve complex math problems to generate the hash. Once the new block is mined successfully, all nodes on the network accept the hash.
● Nodes
Due to decentralization, no one computer owns the blockchain. The entire chain is connected via nodes which can be any electronic device that keeps the blockchain networkrunning.
In the blockchain, many blocks are looped together that make a chain. For blockchain to work and add a block, the transaction must be made, verified by a network of computers. These transactions are then stored in the block. After the verification is done, there appears a green light as a signal. Afterward, the block must be given a hash with a specific identifying code. After the block is given a hash, it is added to the publically available blockchain.
Practical Implications of Blockchain Technology
This technology enables internet users to create value and authenticates digital information. Other than its benefits of monetary transactions, several other blockchain technology applications have revolutionized our lives. Let’s face it.
● Cryptocurrency
With the help of blockchain technology, Bitcoin transactions can be made without any centralized authority. It has reduced the risk of losing currency as well as processing and transaction fees.
● Smart Contracts
This technology has enabled the coding of simple contracts that are executed when certain conditions are fulfilled. Ethereum platform, which is one blockchain project, assists in realizing this possibility. Smart contracts that are built into this technology facilitate negotiation and verification of contract agreements.
● Banks
Banks can highly benefit from blockchain technology. Your transaction takes time to get verified when it is done through financial institutions. In contrast, Blockchain technology never sleeps and can instantly carry out transactions and at any point in time. The integration of this technology into banks allows consumers to view their transaction processes.
● Healthcare
Blockchain technology helps the healthcare sector secure patients’ medical records. The patient’s information is encoded and stored with a private key that can be accessed by an authorized person whenever needed.
● Voting
When it comes to voting, this technology helps eliminate possibilities of fraud while boosting voter turnout. Its protocol maintains transparency in voting and thereby reducing the need for personnel to conduct the election and provide voting results to officials instantly.
● Supply Chain
Blockchain technology also assists suppliers to record information about purchased materials accurately. This, in turn, helps in verifying the authenticity of products.
Final Thoughts
Now you know how blockchain technology works and its applications in different sectors. It has made many business operations efficient, accurate, and secure. It is anticipated that this technology will further bring invaluable innovations in our lives. Moreover, several different sectors will also catch on this technology; however, the only question remains ‘When?’
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