The full And
Comprehensive Guide to How Blockchain Works
Already you must have heard of Bitcoin and cryptocurrency. And how it is related to the blockchain technology.
In this post I will try as much as possible to help you break down the idea behind blockchain technology
Let's assume a ledger which is owned by Apple(ios)which is shared by every computer in the world and is connected to the internet. Every time a transaction happens, it gets recorded onto a row of this ledger
Anyone with a mobile phone or computer can connect through the internet and can access the data on the ledger. Anyone can view and add a transaction to this ledger, but the ledger doesn’t allow anyone to edit the information which is already there that's just the theory behind Blockchain
The same way that this spreadsheet has “rows”, a blockchain has “blocks”.
officially
A block is a collection of data. And each piece of data is added to the blockchain by connecting one block after another in a chronological way, much in the same way a row of a spreadsheet follows another row.
And this series of connected blocks one after another makes it a chain of blocks (i.e. a blockchain).
you can also look blockchain is a global online database which anyone anywhere with an internet connection can access. Because it exists on the internet, it is “decentralized” as well, meaning the blockchain ledger is shared among all computers around the world, not in one central location.
What is a wallet?
A wallet is a string of numbers and letters, such as 1563djgdfjg3303c300e136f22673b74. This is an address that will appear in various blocks within the Blockchain as transactions holds . No visible records of who did what transaction with who, only the number of a wallet. The address of each particular wallet is also a public key
Bitcoin is created and hosted on Bitcoin’s blockchain.
Unlike fiat money, you can send Bitcoin money to anyone and anywhere without seeking permission from banks or governments.
Bitcoin’s blockchain disregard the fact of either you are a human or a machine.hundred Thousands of Bitcoin nodes(computers)on the blockchain are equally able to authenticate the legitimacy of payments. That’s why there is no need for any third party intermediaries like banks.
The Reason why Blockchain Cant Be Hacked
Since we already know what Blockchain is all about, its time to know the how a blockchain works. Bitcoin will be used as example because most of us that's what we are most familiar with.
In Bitcoin’s blockchain, there exist 1 MB blocks which contain P2p transactions. These blocks are added every 10 minutes after they are verified by miners with the help of an inbuilt consensus mechanism. Each entry in these blocks is secured by cryptographic math which makes it irreversible.
These blocks have unique features like:
>They are time stamped.
>They are distributed and decentralized.
>Anyone can view what’s on the block.
>They are computationally irreversible.
When a transaction happens on the Bitcoin blockchain, it goes into a pool of unconfirmed transactions called the “Mempool“. These transactions are then categorised into a block. After this, miners solve a computationally difficult math problem to add this block to Bitcoin’s blockchain.
In this way, as more blocks keep on getting added to the blockchain, it becomes more computationally difficult to reverse the transaction or to double spend a transaction.
And simultaneously, Bitcoin’s blockchain is used by huge amount of users who are running this discentralized ledger on their personal computers. It’s like having millions of copies of Bitcoin’s ledger starting from “the Genesis block”, which Satoshi Nakamoto mined.
Each of these copies contains the history of blocks since the beginning of the Bitcoin network. This makes it difficult for anyone to corrupt or take down the system.
Moreover, each transaction is secured by strong cryptographic math.
Anyone who wants to change the ledger needs to overpower and hack the 51% network to reverse the cryptographic math. This means that a hacker has to hack 51% of the total number of computer nodes which are running this ledger at various locations and at the same time.
Even if one tries to do this, it would require a practically huge amount of capital, can't be performed by a single party and energy. This is what makes the blockchain unhackable
blockchain solutions can be implemented across many industries to solve various issues.
Also Read :Bitcoin:Thr beginners guide to cryptocurrency
The Necessity For Blockchain
Blockchain, as explained above, is an immutable and transparent database of records. This immutability(can't be changed)and transparency ensure that there is no need for any third person to look after the database.
lets look at this example of a farmer from nigeria who bought a portion of land, but in a flood, he lost his copy of the deed and agreement of the land. Now he has no way of claiming he owns his land. And he had a digital copy of the ownership agreement on a governmental database, but that too was destroyed during the flood. Now, this farmer is at a loss!! He would have avoided these problems had he filed his land deed copy on a blockchain, which would have had multiple copies distributed around the world.
This is only case scenario in which a blockchain would come in handy Apart from this, the tech of blockchain will matter by protecting our identity, verifying ownership, avoiding double spending of money etc
it’s no exaggeration that blockchain technology will soon be an integral part of our lives.
Blockchain Technology And The future
The blockchain is the mother of the over $200 billion cryptocurrency market.
But the success or failure of Bitcoin or any other cryptocurrency will not decide the blockchain’s future.
The blockchain is bigger than cryptocurrencies.
Some notable shifts in the blockchain ecosystem are as follows:
In 2016, the blockchain attracted a $ 1.4 billion investment as reported by PwC.
In 2016, the Dubai government declared that it will be shifting all of its supply chains onto blockchain by 2020.
Recently, Ethereum established the EEA- Ethereum Enterprise Alliance and IBM is working on Hyperledger.
More than fifty of the world’s leading financial firms are experimenting with blockchains.
Applications of Blockchain
blockchain solutions are being discussed in industries like automobiles, identity management, intellectual property rights, real estate, healthcare, supply chain management, and governance etc let's take a look at some of the examples.
Identity verification
Too much time and effort is wasted on identity verification. Using the decentralization of Blockchains, the verification of online identity will be much faster. Computer hackers will no longer have centralized points of vulnerability to attack
Blockchain Application in Bank Use
By integrating blockchain into banks, users can see their transactions processed in as little as 5 minutes, basically the time it takes to add a block to the blockchain, regardless of the time or day of the week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely.
Blockchain in Cryptpcurrency
Distributing its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies to operate without the need for a central authority. This not only reduces risk but also avoids many of the processing and transaction fees.
Blockchain protection of intellectual property
Archiving enabled by Blockchain will offer much greater protection of intellectual property than before. An application called Ascribe, using Blockchain, already gives this protection.
Blockchain in Health Care
blockchain, which provides patients with the proof and confidence that the record cannot be changed. These personal health records could be encrypted and stored on the blockchain with a private key, so that they are only accessible by certain individuals, thereby ensuring privacy
Blockchain in Supply Chain
Suppliers can use blockchain to record the origins of materials that they have bought. This would allow companies to verify the authenticity of their products, along with health and ethics labels like “Organic,” “Local,” and “Fair Trade.”
Blockchain Uses in Voting
Voting with blockchain has the potential to eliminate election fraud.The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and provide officials with instant results.
Blockchain In insurance Claim
Now with the implementation of Blockchain technology, you could just submit your insurance claim online and receive an instant auto payout. Providing, that your claim meets all the required criterion.
Important notes
There's no Blockchain network in existence that could sustain the same amount of transactions as major card issuers like Visa or MasterCard do. As of 2017, Blockchain still has a very long way to go before it will be capable of replacing the giants of the financial world.Any Blockchain network largely depends on the amount of active users within it. In order to operate to its full potential.
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