Introduction

Blockchain technology is the latest way to record, trace and transfer digital assets using decentralized networks. Got it? Let’s try to understand it with an example.

Companies use Excel worksheets for assessing the daily activity of their employees. The Excel sheet is not copied or transferred; it is shared with employees. As a result, a decentralized distribution network is established, allowing everyone to access the original file simultaneously. All file changes are recorded in real time, making them transparent.

But the difference between Excel Worksheet and blockchain is that the original information and data on the blockchain are uneditable after being written. Of course, blockchain is more complex than an Excel Worksheet, but the comparison is helpful as it highlights vital blockchain concepts.

Blockchain Technology

Why does Blockchain Technology Matter?

Data is vital for modern-day businesses if it is accurate and processed quickly. Distributed ledger technology is the best way to deliver that output as it can offer shareable, real-time, and transparent data, which is kept on an immutable (unchangeable) ledger. So, it is only accessible to the members of a permissioned network. Furthermore, a blockchain network can accurately track a business’s accounts, orders, payments, and production. Additionally, because everyone has access to the same data version, you can track the aspects of a transaction from beginning to end.

Types of Blockchain Networks

Public Blockchain Networks

A public blockchain network is one that anybody can access and use, such as Bitcoin. But it has some drawbacks, such as the need for much computational power, a lack of privacy for transactions, and security.

Private Blockchain Network

A private blockchain network is decentralized, just like a public blockchain network. But in a private blockchain, a single organization controls the network’s system, executing the procedures and managing the shared, immutable ledger. Depending on its use, this can significantly boost users’ confidence. Other options are running a private blockchain network behind a company firewall and hosting it on-site.

Permissioned Blockchain

Businesses that create a private blockchain can create a permissioned network. It’s important to understand that public blockchain networks can also have permissions. So, there are limitations on which transactions can be made and who can participate in the network system. To join, participants must receive an invitation or permission.

Consortium Blockchain

Different networks share the use and maintenance of blockchain. Who can communicate or access these pre-defined networks? A consortium blockchain is the best option when everyone involved in a business transaction needs permission and shares ownership of the blockchain.

Types of Blockchain Networks

How does Blockchain Work?

Blocks, nodes, and miners are three essential aspects of the blockchain.

How do Blocks Work?

Each block in a chain has three fundamental components:

• The stored data in the block
• The nonce or one-time use number in the blockchain (A nonce is a 32-bit whole number that is generated at random when a block is created and used to produce the block header hash)
• In the blockchain, a hash is a 256-bit value that is inextricably linked to the nonce. A nonce produces the cryptographic hash at the start of a chain. Unless it is mined, the data in the block is regarded as signed and permanently bound to the nonce and hash.

What does a Blockchain Miner Do?

Mining is the practice by which miners add new blocks to the chain. Every block on a blockchain has its distinct nonce and hash, but it also refers to the hash of the block before it is in the chain, making it tough to mine a block, particularly on larger chains.

Finding a nonce that produces an approved hash is a tricky arithmetic task, and miners employ specialized software to solve it. Since the hash is 256 bits, but the nonce is just 32 bits, it takes around four billion nonce-hash combinations to get the correct one. Miners claim to have discovered the ‘golden nonce’ at that point, and their block is added to the chain.

What does Blockchain Decentralization Mean?

Decentralization is the fundamental idea behind blockchain technology, as no individual computer network or entity can claim the whole chain. Instead, it operates as a distributed ledger through the network’s chain of nodes. Any electronic device that saves copies of the chain and keeps the network running can be a blockchain node.

Every node has a distinctive copy of the blockchain, and for the trusted, updated, and confirmed chain, the network must algorithmically approve every newly mined block. As blockchains are transparent, you can review and examine every activity in the ledger. A unique alphanumeric identification number is supplied to each participant, and this number displays their transactions.

How does Blockchain Work?

Uses of Blockchain in Industries

Many people think blockchain technology only enables bitcoin transactions, but that is not true. Because it’s secure, transparent, and fast, technology helps supply chains, health care, retail sector, manufacturing, etc.

Blockchain in Cryptocurrencies

The everyday use of blockchain technology, through blockchain wallet, is in cryptocurrencies which are digital tokens or assets such as Bitcoin, Ethereum, etc. Like digital cash, cryptocurrencies can buy products or services online. But unlike digital cash, cryptocurrencies use blockchain technology to act like a public ledger for secured payments.

Blockchain in Supply Chain

Blockchain technology assists in the supply chain for transparency and traceability. It can assist businesses in recording price, date, location, quality, certification, and other relevant information to more effectively manage the supply chain. The convenience of this information within the blockchain can increase the traceability of the material supply chain.

Blockchain in Healthcare

Blockchain technology can help healthcare providers securely store their patients’ medical records. The medical records can be written on the blockchain, which ensures patients with trust that the record cannot be changed. Personal health records can be encrypted and kept on the blockchain with a secretive key, so they are only available to specific individuals, ensuring privacy.

Blockchain in the Retail Sector

The traditional process of maintaining property records is not just costly and time-consuming; it is also prone to human error, making tracking property ownership less accurate. Blockchain can exempt the need for scanning documents and tracking down physical files. The stored and verified property on the blockchain is secure and permanent.

Blockchain in Voting

Blockchain technology can help the election process to minimize the fraud element. The use of blockchain in the electoral process can make it nearly impossible to rig the election process. This can remove the need for recounting and resolve many political problems.

Benefits of Blockchain Technology

Trusted

Blockchain technology is trustworthy as it can provide accurate data. Suppose a user is a member of the ‘members only’ network; he can assure that everything is secured and shared with only authorized people. All the transactions and other data are permanent and secured.

Secured

Cybersecurity is one of the biggest emerging technology problems. Criminals can use the hacked data for illegal activities. On the other hand, hacking blockchain technology is nearly impossible. Hackers can damage one computer network or two but cannot damage thousands of networks simultaneously. This makes blockchain the most secure technology of the day.

Efficient

The secure technology of blockchain increases the efficiency of workflow. Only selected network members can access the verified information. A small contract is a set of rules that can boost the transactions and stores them on the blockchain.

Benefits of Blockchain

Drawbacks of Blockchain Technology

Technology Cost

Although blockchain technology can speed up transactions and store data permanently, it is far from free. Bitcoin validation system requires heavy computational power, increasing the use of electricity. But bitcoin miners do it anyway because of the reward of mining.

Illegal Activity

Criminals use blockchain technology for illegal activity in making online transactions. The most common example is the ‘silk road,’ an online dark web illegal drug and money laundering marketplace operating from February 2011 until October 2013.

Conclusion

The use of blockchain technology is growing by the day. Apart from bitcoin transactions, it assists other sectors in operating businesses securely. It helps businesses to store data and track their performance and business forecasts. Although blockchain has some drawbacks, it can still be helpful. The need of the day is to understand it and make it accessible, cost-productive and business-friendly.

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