What is Blockchain Technology?
Is blockchain technology the new internet?
What is Blockchain Technology? Without a doubt, Blockchain is amongst the cleverest things to have been thought of by man. Being an idea of a person or group of people whose assumed name is Satoshi Nakamoto. Since inception, the Blockchain has become more and more acceptable, and bigger. However, a lot of people are still in the dark about the operations of this amazing entity, so the question “what is Blockchain” has become a lot more common than ever.
Blockchain works with the concept that allows the distribution of digital information, however, it doesn’t let it get copied. It has become the foundation of a new type of internet. Initially, Blockchain was meant to store up digital currencies like the Bitcoin, but these days, its use has been diversified and has been applied to other aspects. Click here to trade digital coins and chat instantly with top traders.
How does the Blockchain Work?
Imagine having a thousand copies of the same spreadsheet distributed across a network of computers. Then the make-up of this network allows it to update the spreadsheet every now and then. Block chain works in a similar fashion.
Every information on Blockchain is in the form of a shared – and continually reconciled – database. This is a way of using the network that is obviously very beneficial. The entire database of Blockchain is completely public and very easy to verify. In fact, there is no particular storage location for its database. There is no specific database location, so it is impossible to hack or corrupt. The Blockchain is hosted by millions of computers at the same time, and as a result, every internet user has access to it.
Blockchain Durability and robustness
What is Blockchain Technology? Blockchain technology is similar to the internet, and this is owed to its built-in robustness. It stores blocks of information that are the same throughout its network, the blockchain cannot:
- Be controlled by any single entity.
- Has no single point of failure.
Since the invention of Blockchain in 2008, it has been fully functional without any major challenges. Up until the present time, any issues that the Bitcoin has faced resulted either from hacking or bad management. Therefore, these issues are more of human errors and the bad intentions of hackers, not because of the errors in the concept on which it runs.
The internet has by itself lasted through 30 years. And as blockchain technology continues to evolve, it has the potential to achieve this feat.
Transparent and incorruptible
The blockchain network is completely transparent and incorruptible owed to its operations. The system is does a routine check-up automatically every ten minutes. It sort of audits itself to balance every single transaction that goes through it. Every transaction is grouped into blocks. Two important properties result from this:
- Transparency data is embedded within the network as a whole, by definition it is public.
- It cannot be corrupted altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.
This doesn’t really apply to the real world, it may add up in theory, but it’s not really practical. Assuming one takes control of the blockchain to capture bitcoins, it would also tell negatively on the value of the coin. Click here to trade digital coins, get up to 100% welcome bonus and chat instantly with top traders.
A network of so-called computing “nodes” make up the blockchain.
Node, a computer which is linked to the blockchain network which uses a client to take actions that relates to validating and relaying transactions, receives a copy of blockchain, which is downloaded automatically once they join the blockchain network.
They work hand-in-hand to create a super strong second-level network, which is a whole new level as compared to the current stage of the internet.
Each node functions as an “administrator” of blockchain, and joins the network voluntarily which means, the network is decentralized. But every administrator has only one goal why they’re in the network, and that is to win Bitcoins.
The term “mining” isn’t so good a term for describing the function of nodes. To put it simply, each node tries to win bitcoins by resolving computational puzzles. The bitcoin is the primary reason behind blockchain. Today, it has earned its spot as the first of many possible applications of the technology.
The idea of decentralization
What is Blockchain Technology? The blockchain is by design a decentralized technology.
Whatever takes place on it is a function of the entire network. This is the origin of several outstanding features which it possesses. The blockchain has taken over as the most effective means of verifying payments in everyday online buying and selling, so it is utterly useless to create a new way for verification. With the ability to run stock market trades concurrently, for example – or it can cause types of record keeping, such as land registry to become visible to the public. And decentralization is already a reality.
The database that keeps track of bitcoin transactions are controlled and managed by blockchain using a network of computers. This means that Bitcoin manages itself with its network, not any single entity or authority. The idea behind decentralization is that the network functions based on a user-to-user basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
Who will use the blockchain?
The knowledge of blockchain won’t be beneficial if you’re just a web infrastructure. However, it can benefit you in terms of usage.
These days, the blockchain technology has proven most useful in the aspect of finance, such as international remittances. According to an estimate by the World Bank, about $430 billion was sent in the US in money transfers in 2015. And currently, blockchain developers are in high demand.
The blockchain has eliminated the middleman in these kinds of transactions. The evolution of the Graphical User Interface (GUI) made personal computers accessible to the public, now known as the desktop.in the same vein, online wallets applications are the most frequently used GUI made for the blockchain. People use these wallets to store as well as make purchases with their bitcoin, or other cryptocurrencies. Click here to trade digital coins and chat instantly with top traders.
Online transactions have a close relationship to the processes of identity verification. And it is very possible that wallet apps would feature other types of identity management in the future.
The Blockchain & Enhanced security
What is Blockchain Technology? The blockchain stores data across its network, and as a result, it takes away the risks that are associated with storing data centrally.
There are no centralized points in its network, so hackers have nothing to capitalize on. In our world today, there are lots of internet issues and we depend on our username/password system to keep our data and identity safe. However, blockchain technology utilizes encryption technology.
It works on the basis of the public and private “keys”. A ‘public key’ which is a lengthy string of random numbers, which is generated by blockchain and serves as the wallet address. Once bitcoins are sent to a particular user, it gets recorded against the unique address. Furthermore, the “private key” is similar to a password, which grants a user access to their bitcoin or any other digital currencies they may have stored. Blockchain is safe and incorruptible. However, each user has to keep their address safe. And because it is lengthy, it would need to be printed in paper form, which is referred to as a paper wallet.
What is Blockchain Technology? Conclusion
The Blockchain a New Web 3.0?
The blockchain makes it possible for internet users to create value and validate digital information. What will new business applications result?
- Smart contracts
Distributed ledgers makes it possible to code simple contracts that would become effective once some set conditions are met. Ethereum, designed by blockchain as an open source project was made with the primary purpose of making this possible. Although Ethereum is still considerably new, it has the capacity to leverage the usefulness of blockchain on a very high scale.
Currently, smart contracts can be designed to carry out simple functions with Ethereum. A simple analogy can be drawn from the payment of a derivative as soon as a financial instrument reaches a specified benchmark, using blockchain technology and Bitcoin, making the payout to be automated.
- The sharing economy
The sharing economy has by itself already proven successful with major companies like Uber and AirBnB as a testament to their success. At the present time, users need to depend on middlemen like Uber to hail a ride-sharing service. But by making peer-to-peer service payments possible, blockchain moves another step in removing the intermediary, so both parties can transact directly – a truly decentralized sharing economy results.
Crowdfunding initiatives such as Kickstarter and Gofundme are moving forward regarding peer-to-peer economy. These sites have become more and more popular, and an indication from its users shows that they want to have a say in product development. The blockchain has moved in the interest of the public, to create sourced venture capital funds.
Owed to their ability to make results completely transparent with total public access, distributed technology could bring that much-needed transparency to election processes, or any type of poll taking. Ethereum-based smart contracts aid the automation.
Boardroom, an app, makes it possible for organizational decision-making to take place on the blockchain. This means that company governance becomes completely transparent and verifiable as they manage digital assets, equity or information.
- File storage
The benefits of a decentralized file storage on the internet are clear. Data distribution across the network makes hacking or losing files far-fetched.
With Inter Planetary File System (IPFS), it is possible to have an idea of how a distributed web might function. The same way a bittorent carries data around the internet, IPFS makes centralized client-server relationship unnecessary. The speed of file transfers and streaming times will potentially increase in an internet that contains completely decentralized websites. This would not only be a welcome and far more convenient improvement, it is important to improve upon the web’s overload content-delivery systems.
- Protection of intellectual property
Digital information can be replicated multiple times and spread in a matter of seconds with the internet. And as a result, internet users all over the world have access to content for free. But this has affected copyright holders to a great extent, causing them to lose control of their intellectual property which translates to loss of finances. With smart contracts, it is possible to get protection for copyright, and help inn automating the sale of creative works on the internet, which is a perfect solution to file copying and replication.
- Internet of Things (IoT)
What is the IoT? The network-controlled management of certain types of electronic devices — for instance, the monitoring of air temperature in a storage facility. With smart contracts, the remote systems management can be automated. A blend of software, sensors, and the network makes data exchange between objects and mechanisms possible. This results in an improved system efficiency and cost monitoring.
The most dominant force in the manufacturing, tech and telecommunications industry like Samsung, IBM, and AT&T are all in support of IoT, and look forward to it taking over. A natural extension of existing infrastructure controlled by incumbents, IoT applications will run the gamut from predictive maintenance of mechanical parts to data analytics, and mass-scale automated systems management.
- Identity management
In our world today, the need for an improved identity management cannot be overemphasized. As it is very vital to the processing of various financial transactions on the internet. But the solutions available to mitigate the risks that accompany web commerce are not so effective. Distributed ledgers provides improved means of proving identity, and also comes with an opportunity to digitize personal documents. With a secure identity, online interactions can be safer and better. This would be very beneficial to the sharing economy. A good name is in fact very vital for online transactions.
Improving upon digital identity standards is quite a complicated process. Besides the technical difficulties, for an online identity solution to be effective throughout the world, there is need for private entities to cooperate with government. Another aspect that could pose an even bigger challenge is the differences in legal systems in different countries of the world. Presently, e-commerce depends on the SSL certificate (the little green lock) for safe transactions over the internet.
- Data management
Currently, people can use their data as a means of exchange for free access to social media platforms such as Facebook. However, this is projected to change in the future. Users will get a better control of their online activity, and would be able manage and sell the data that comes off their online activity. And owed to its ability to be shared in very little amounts, it is very likely that the bitcoin would be the currency for transactions of this nature.
- Land title registration
Because blockchains are ledgers which is accessible by the general public, they do a better job at keeping records than any other entity. A simple example where this would be effective is in property titles. They are very vulnerable to fraud, expensive, and requires a lot of work to achieve.
Several countries are adopting blockchain-based land registry projects. Honduras took the lead in this, and made it public in 2015. However, we do not know how far they have gone with it. Several other countries are buying into the idea. Earlier this year, the Republic of Georgia cut a deal with the Bitfury Group, to develop blockchain-based property titles. It has also been said that Hernando de Soto, a renowned economist and property rights advocate will give advice on the project. Not long ago, Sweden made it public that it was trying out blockchain-based property titles.