Blockchain: trust, security, and transparency, at low cost with high efficiency

Blockchain: trust, security, and transparency, at low cost with high efficiency

 

I am sure most of you now days often hear terms such as ‘Blockchain’ in various forums and discussions across the board. But we are too busy in our daily lives and care less to clarify in group meetings or small parties. Sometimes are ego does not allow us to learn from others who have the depth of knowledge and communication skills. Let us take this opportunity to understand the basics of ‘Blockchain’ system. It always pays to enhance our knowledge about a new technology.

Simply, explained ‘Blockchain’ is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

What is Blockchain technology with example?

A Blockchain is a chain of blocks that contain information. The data which is stored inside a block depends on the type of blockchain. For Example, a Bitcoin Block contains information about the owner, sender, receiver and the number of bitcoins that is to be transferred from one address to another.

What is the main purpose of blockchain?

Let us now understand the main purpose of the blockchain. The sole purpose of blockchain is to allow digital information for recording and distribution, but not editing them. Thus, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed.

What are the advantages of Blockchain Technology?

There are multiple advantages of blockchain technology. Blockchain increases trust, security, transparency, and comprehensive details of data shared across a business network at low cost with high efficiency.

How do you explain blockchain to beginners?

Beginners need to understand a block. A Blockchain is a chain of blocks that contain information. The blockchain is not Bitcoin, but it is the technology behind Bitcoin. Every block contains hash. Each block has a hash of the previous block. Blockchain mandates ‘Proof of Work’ before a new block is added.

Let us learn from an example of blockchain?

Bitcoin and Ethereum are popular examples of blockchains. Everyone is allowed to connect to the blockchain and transact on them. As a matter of fact, it is the blockchain technology that has bolstered the rapid rise of cryptocurrencies across the globe.

Now, let us learn about the dynamics of bockchain? How does it work?

The primary aim of using a blockchain is to enable transactions among unpeopled or strangers who have never met before or spoken to each other. Facilitate people — in particular, people who don't trust one another — share valuable data in a secure, tamperproof way. This is possible due to the technology. Blockchain consists of three important concepts: blocks, nodes and miners.

Blocks

Every chain consists of multiple blocks and each block has three basic elements. The data that is stored in the block. It is a 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which subsequently generates a block header hash. The hash is a 256-bit number wedded to the nonce. It starts with a large number of zeroes (i.e., be extremely small). After the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined. 

Nodes     

One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. These nodes are can be different forms of electronic device that records copies of the blockchain and while ensuring functioning of the network.

Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. As blockchains are transparent, every action in the ledger can be easily checked. Each participant is given a unique alphanumeric identification number that show the transactions.

Combining public information with a system of checks-and-balances helps the blockchain maintain integrity and creates trust among users. Essentially, blockchains facilitates the scalability of trust via technology in a big way.

Miners

Miners create new blocks on the blockchain through a process called mining. When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.

Where is blockchain used in India?

In India, blockchain solutions have found the most takers in banking, financial services and insurance industry. The public sector has also been actively using this technology for use cases such as land title registry, vehicle lifecycle management, farm insurance and electronic health record management.