What is Blockchain Technology?
Blockchain, as the name suggests, is a chain of blocks. Each block has an identification value known as a hash. Every block contains a particular piece of information, the block’s hash, and the hash of the block created just before it. It acts as a trustworthy list of records that keeps growing.
The concept of blockchain was introduced by some researchers in 1991. However, it was only in 2009 that it got widely adopted when Satoshi Nakomoto created a digital cryptocurrency called Bitcoin using the technology.
Different types of blockchains store different types of data. For instance, a cryptocurrency blockchain stores transaction information.
How Does it Work?
Blockchains are considered tamper-proof as they make it extremely hard (almost impossible) for anyone to change the data they store. This is because blockchain uses distributed ledger technology. It means that all the nodes connected (globally) on the blockchain network have a copy of the entire chain, and changing the contents of any block would need the approval of every node.
Also, whenever a change is made to a block, its hash gets regenerated, meaning that the chain connecting the blocks breaks. The only way for malign actors to get past this issue is by gaining control over more than half the nodes on the network, OR, by recreating all the remaining blocks on the chain before the nodes on the network realize it. However, blockchain hinders this as a new block can be created only once every ten minutes.
A distributed ledger technology, blockchain is easily programmable, secure, and can be time-stamped. It is also safe as everyone in the network must agree on the validity of all the records, even though the identity of the network participants can be anonymous. In addition, the irreversibility of the records makes it further safe.
Where is it Used?
Needless to say, the applications of blockchain are endless. Anywhere that transactions require visibility and traceability, blockchain makes a good fit. For instance, blockchain can be used in the supply chain department to sign or manage contracts and audit products. In hospitals, patient records (especially since they are confidential) can be stored using blockchain. Voting could also be a great application, as blockchain would enable votes to be cast via any electronic gadget and give results that can be verified immediately! And, of course, the ability to confirm transactions in the absence of a central authority makes it ideal for an electronic cash system, aka cryptocurrency.
Blockchains are essentially a network of nodes. So, they can be either public or private, depending on the use-case scenario. There is no third-party supervision on a public blockchain, and all transactions are visible to everyone on the network. However, users are required to be permitted to access transactions in private blockchains. Different permissions can be enabled for various stakeholders in the network. A combination of public and private blockchains, where part of a company’s information is available on the internet while the rest is not, can facilitate highly efficient ecosystems in any industry.
To better understand the aspects of your business that can be improved using blockchain, call your Blockchain consultant in Houston, Texas today!
