All of us have heard of Cryptocurrency – the digital currency but not many know of blockchain - the technology behind Cryptocurrency.
In Today’s blog, we shall know a bit about what Blockchain is and what makes it path breaking.
In simplest terms Blockchain is a process of recording data in a way that would make it impossible to hack or cheat. It is an open source technology for transfer of Cryptocurrency.
It is a medium of exchange that uses encryption technology to verify transfer of funds and is completely digital.
Blockchain technology is a ledger that is decentralized through which transactions can be confirmed without any need of central clearing authority.
Blockchains are immutable which makes any data that is fed in to irreversible.
Blockchain is a decentralized technology meaning that no single person gains control rather all users collectively gain control.
How Does Blockchain Work?
Blockchain is a type of shared database that stores information in blocks.
As a transaction occurs, it gets recorded as blocks. These blocks record information in the form of what, when, who, how much and even at what condition.
Each block is connected to the previous one and so on and so forth. Thus forming a chain.
As the asset (tangible and intangible) moves from one owner to another. These blocks securely link together thereby preventing any of the blocks from being altered in any way whatsoever.
This in effect renders the entire blockchain tamper proof.
Every transaction is also time-stamped on the block.
- Shared Ledger Technology
As this is an open ledger technology, every participant has access to the transactions. Transactions are recorded just once thereby removing the duplication of effort.
- Immutable Records
After having been recorded, no party can change the transaction that has taken place. Even if there is any error recorded with the transaction, a new transaction must be recorded to reverse the error. Thus making both the transactions visible.
- Smart Contracts
In order to speed up transactions, rules are set and stored in the blockchain and executed automatically.
- Greater Efficiencies
Blockchain brings in efficiencies in the system in the form of eliminating time consuming reconciliations. Furthermore, automatic execution of transactions take place via smart contracts which speeds up transactions.
- More Trust
With the entire system being immutable, there is little doubt that it cannot be tampered with. This brings in more trust among all parties.
- Greater Security
Once the transaction is set in motion, no one can delete it. All transactions are immutable and are recorded permanently. All this makes it blockchain a high secured network.
If anyone wanted to hack the blockchain system, they would need to hack every block in the chain across the entire network making it an impossible task.
- Increased Transparency
- Accurate Tracking
- Permanent Ledger
- Cost Reduction
- Complex Technology
- Regulatory Implications
- Implementation Challenges
- Automobile Industry: Blockchain can be used to transfer ownership of automobiles
- Financial Services: Billions of dollars of transaction cost can be saved that to at a much faster pace and improving transparency
- Voting: By using blockchain codes, masses can cast their votes via their smartphones resulting in immediate verifiable results.
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