All of us may have come across some fraud. The fraudsters may have tried to hack your data or tried to withdraw money from your account on your behalf. Well, now we have a solution to this problem: Blockchain Technology that is eliminating such types of digital fraud. Blockchain technology is a technique in which data is stored. This technique stores data in a decentralized manner, which is highly secure due to its cryptographic nature.

Have you heard of Bitcoin? Yes, that is precisely the start of blockchain technology. Today, this technology is widespread, from finance to healthcare. This technology is helping industries record data in the most secure and organized way possible. The exciting thing about this technology is that no single person owns the authority but can still access the data. 

As per research conducted by the McKinsey Technology Council, there will be more industries associated with blockchain technology that will be approx 10% of the global GDP. 

Also read: How Does Blockchain Support Data Privacy?

In this blog, you will learn more about this marvelous technological advancement. From its features, applications, how it works, advantages and disadvantages to its invention history. 

Are you ready to know the potential changes it can make in the coming years? So, brace yourself as we take you deeper into blockchain technology and read on. 

What is Blockchain? 

A blockchain is a public ledger that is accessible to everyone, but no one on the network can delete or modify it. The information is stored in blocks, and they are linked to each other with encryption using cryptography. Each block has its unique key, along with the key to the previous block, making a chain. The blocks contain details like transactions and digital contracts. The special feature of the blockchain is that no single entity holds the master copy available to all participants on the network. So, how is it secure? If any one participant wants to change any block, it is not possible. Since the participants will have to change all the blocks, this makes the technology immutable and maintains accurate records.

Also read: A Beginners Guide: Is Crypto and Blockchain Same Thing?

History of Blockchain 

One of the popular uses of blockchain technology is Bitcoin. And if you think this technology just evolved a few years ago, then you are mistaken. So, are you curious to know who gave birth to blockchain technology? Let’s discuss the history with its timeline.

1991: Two researchers, Stuart Haber and W. Scott Stornetta, initiated the idea of blockchain technology. Their idea was to create a system to timestamp digital documents without the information being tampered with. That’s how they thought of developing blockchain with the help of cryptography. 

1992: The concept of Merkle trees was introduced so that all information can be collected in a single block. This was then connected to the previous block forming a chain, a secured form of saving data. 

Sadly, this technology was unused over the years.

2004: Half Finney came up with the feature of “proof-of-work” for digital cash transactions. This marked a change in blockchain technology as it built trust in the system. 

2008: The year when a white paper was published by Satoshi Nakamoto in which he outlined “Bitcoin,” which used blockchain technology. He was the one to make further improvements to the chain and introduce a peer-to-peer network. This peer-to-peer network helped to timestamp and validate data. 

2009: The blockchain was mined with steady growth as the technology was demanded in various fields. 

2014: With the improvements made constantly in Blockchain technology over the years, Blockchain 2.0 was released. 

Lately, the upgrades made to the technology have even been used in other fields like hospitals and voting systems. 

Types of Blockchain

There are two types of blockchain technology: 

Also read: What is Cryptocurrency Explain in Detail?

Public Blockchain

In simple terms, a public blockchain is a ledger that is open to all. This means that the transactions on the public blockchain are visible to everyone. This builds trust and accountability in the system. Also, there is no single entity controlling the network, which eliminates the risk of tampering with data. One of the famous uses of a public blockchain is made in Bitcoin. 

Private blockchain

A private blockchain is a ledger that is only accessible within the organization that controls the network. The organization decides the participants allowed on the network. They also can make their own rules and permissions for safeguarding their data. Private blockchain has faster processing time compared to public blockchains due to limited participants. Examples of private blockchains are voting systems, healthcare, and supply chain management companies. 

How Blockchain Works? 

Blockchain is an advanced technology that helps to secure digital information while maintaining transparency. But how does blockchain technology work? Let’s break down how it works: 

A participant on the peer-to-peer network adds the information of the transaction or contract to the block. This block is then encrypted with cryptographic code. Each block is then linked to the previous block with a unique code. 

No single participant holds the copy; instead, copies are shared across the network. Because of its decentralized feature it makes it impossible to tamper with the data. And if any change is needed then all blocks will need alteration, which is next to impossible. 

To add a new block to the network, the participants use a mathematical algorithm to verify the data, also called proof-of-work. This process ensures that the new block is valid and increases trust in the technology. If the algorithm calculation of the majority network does not match, then the block is rejected. 

As the participants verify the new block, it will be added to the chain with the previous block. That will create a chronological order. The blocks will be chained with the help of a unique code which makes the technology digitally secured. 

Features of Blockchain

Here’s a list of essential features that make blockchain technology unique: 

Decentralization

This is quite a unique feature of blockchain technology, which has no regulatory or centralized authority. You may wonder who then holds the authority. No one; it’s all the participants in the network, that hold the data. The participants in the network are responsible for checking all the data and transactions. 

Immutability

Blockchain is immutable, which means data on this chain cannot be altered or tampered with and is permanent. Since blockchain works on multiple networks called nodes, it is doubtful to delete data. Even if any node wants to modify the data, it would require validation from other nodes. If there is approval from the majority of nodes, the data can be protected. Hence making this technology secure. 

Transparency 

Blockchain technology is different from traditional ones. It lets everyone on the network view the data and check transactions. The blockchain network can be public or private. Everyone with an internet connection can view a public ledger on blockchain technology. Only participants in that network can view a private ledger on blockchain technology. This helps reduce any digital fraud. 

Security

The security of these blocks is maintained with an encrypted key. Each block of this technology has a unique code. All the blocks have two encryption, one of their own and the other one. This is called the hashing of data. That’s how the technology makes it difficult for anyone to alter or modify any data on this network and maintain security. 

Consensus 

This is one of the core features of blockchain technology. Consensus is an algorithm on the blockchain that helps its participants make decisions. This way of validating data is also called proof of work. But what does it do? Basically, consensus algorithms help the group of active nodes reach a decision quicker. Since nodes do not trust each other, they have to use algorithms to help get unbiased decisions. 

Blockchain application 

Finance

Blockchain technology is used in the finance sector for its transparent and secure features. Blockchain helps in banking functions like cross-border transactions, reduction of fraud, and faster settlement of transactions. Blockchain technology enables quick decisions since agreements are automated. 

Supply Chain

Blockchain is used to optimize logistics, from tracing shipments to managing goods. It is also used in smart contracts to increase transparency and accountability. This ensures quick sharing of data and reduces fraud as the technology is tamper-proof. 

Healthcare 

Blockchain technology can help in maintaining patient records as well as medical equipment and medicine data. There can be a reduction in fraud committed by insurance companies that prescribe incorrect medical care and medicines for patients. The accurate data of patients will also help in research and development in the industry. 

Entertainment 

Blockchain applications in the media industry can be used to protect intellectual property by controlling piracy. Content authenticity and ownership can be managed with smart contracts. Its decentralized features help reduce streaming costs as content is secured digitally. 

Advantages of Blockchain Technology 

Trust

Blockchain technology helps build trust among the network participants. This technology also eliminates intermediaries, which allows the sharing of data with security. 

Immutability

 Blockchain technology ensures data integrity since the data stored cannot be altered or deleted. 

Transparency

The decentralized feature in blockchain enables to validation of the data shared by the participant. Since there is no single authority who controls the network, there is increased transparency. 

Secure 

Blockchain uses cryptographic codes to secure data, which is difficult to hack and reduces fraud. 

Traceability

Blockchain enables the tracking of assets and goods. It’s helpful for maintaining an efficient supply chain. The technology can manage their inventory and solve problems related to the supply of goods. 

Disadvantages of Blockchain Technology

Let’s know the flip side of this technology: 

Slow Process

There are many steps involved in validating transactions. From digital signatures to proof-of-work, all steps are time-consuming. It may have slow speed problems when many participants are active on the network. 

High cost 

Blockchain is quite an expensive technology, and only institutes that have the funds can implement it as the technology is capital-intensive and requires a high level of manpower. 

Private keys

 Blockchain uses end-to-end, very complicated encryption. And once you lose the key, it can’t be changed or recovered. 

Storage 

There is limited storage available with this technology. When the number of participants grows on the network, it isn’t easy to store data. 

Scalability 

Each block size can hold only a certain amount of data, which causes scalability issues. There is no way to upgrade the storage space, which is a significant problem in prominent institutes. 

Conclusion 

So, this sums up all you need to know about blockchain technology. Blockchain technology is modern and is still making progress and improvements. Its unique approach to safeguarding data and maintaining transparency is gaining popularity in various industries.

The blockchain was designed to ensure the safety of digital transactions. Features like immutability, decentralization, and proof-of-work have built trust in this system, which is one main reason this technology is adopted by entertainment, supply chain, energy, cybersecurity, and healthcare industries. 

Many institutions are willing to make investments in this technology to perform data security 

and maintain the originality of their data. While there are many advantages in blockchain there’s also a flip side. Currently, the significant limitations are scalability, limited storage and massive investments that are causing the slow growth of this technology. 

Though public blockchain is quite common, private blockchain still needs to be adapted by industries. The complexity of the technology becomes a hindrance for private institutions. Developers do constant work to find solutions to these problems and make the technology user friendly. 

In the years to come, blockchain technology will grow to become an integral part of digital infrastructure. 

Frequently Asked Questions