Introduction to Blockchain
Most of us have come across all the talk surrounding Bitcoin, with some predictions claiming that fiat currencies and gold are fully replaceable in order to store value or pay for transactions, and due to limited supply, Bitcoin could reach astronomical heights in value! In this article, we will aim to demystify the blockchain, the technology that powers Bitcoin, so you can have your say on how revolutionary this technology is!
So we might be wondering, what's so special about
blockchain? Why some of the brightest minds, including the CEOs of many major
corporations, believe that blockchain holds great promise in transforming our
world, and investment in developing the technology continues to grow.
An easy way to understand blockchain is to visualize it as a database that is publicly shared among many participants (although blockchain technology can also be deployed privately, so access is limited). Each of these participants is connected to the network through their computer, and all of these participants maintain the same copy of the database. Therefore, one of the core fundamental principles of blockchain is that information is transparent and available to all participants in the network at the same time.
Bitcoin is arguably one of the most famous public blockchains. It primarily uses blockchain technology to provide its users with digital currency that can be used to pay for products and services, just like regular currency, or act as a store of value. Anyone can join the Bitcoin network because it is open to the public.
Key Features of Blockchain
If a blockchain is just a database, what's so special about it? We have hundreds of different database technologies. To answer this question, let’s explore some of the special features unique to blockchain technology:
Information Security
A blockchain is a cryptographically secure database. In order to read or write information to the database, the user must have the correct encryption key. The keys are paired: a public key that identifies the database and a private key that ensures that only the appropriate participants can update the information in the database. This ensures that information is available to those interested in reading and/or updating it. Additionally, the blockchain can be deployed privately to select participants, further restricting access to who can view and/or update information on the blockchain.
Distributed and Decentralized
Another core feature of blockchain is that it has no single point of failure. If a failure occurs on one or more nodes on a blockchain network, the other nodes still retain data and the network continues to function. By extension, this means that the blockchain is decentralized; no single entity "owns" the network. A blockchain is often referred to as a distributed ledger because information resides on multiple devices on a peer-to-peer network, where each device replicates and holds an identical copy of the ledger and updates independently.
Tamper-proof
Blockchain gets its name from the fact that data is stored as blocks of information, and the blocks are linked together in a "chain"-like fashion. The new information is basically updated together as a block and appended to the previous version, creating an immutable, tamper-proof record. This property of blockchain makes it useful in situations where information must be preserved without any alteration.
Consensus driven
Information cannot be updated on the blockchain unless a
majority of participants check and verify the credentials used. This
consensus-driven model basically ensures that no single entity can control the
data and create fraudulent transactions.
While blockchain technology may not be comparable to traditional databases in some ways, it does have unique features that make it ideal. Let’s explore some of the use cases where blockchain technology can drive innovative solutions and address key issues facing society.
Key Use Cases for Blockchain
Blockchain can be thought of as a digital log of transactions that can be used for a variety of use cases where digital value has not yet been fully realized. Hundreds of granular use cases are currently being developed around the world. Below, we will try to point out some key use cases.
Real-time traceability
In the real world, building traceability of objects or actions is quite difficult. In the retail industry, for example, getting a comprehensive understanding of supply chain processes can sometimes be a huge challenge. When product quality or safety issues occur, it can be difficult to track and recall affected products, or to find responsible entities. in addition. Information is often at risk of forgery and tampering. Blockchain technology can solve all these problems by providing a transparent and immutable record of information through a distributed ledger.
Digital record keeping/digital identity
Many situations require the ability to have permanent digital records. For example, a city may wish to retain ownership registers of residents. Blockchain technology can really help record such information and ensure that the information remains unchanged and accessible to authorized persons. Likewise, blockchain technology can be used to create immutable digital identities of people or companies on a distributed ledger.
Smart Contract
One of the most promising use cases for blockchain technology is the implementation of smart contracts. Smart contracts can execute automatically once certain conditions are met, facilitating certain transactions in the contract without any external input from a third party. Smart contracts have a wide range of applications, including financial transactions, asset and securities management, legal affairs, and more.
The application of blockchain technology is a real game
changer and can solve real problems in the world. However, it remains daunting
for organizations looking to build products and services using blockchain
technology, due to a lack of resources to build teams and hire the right
talent.
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