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Why is everybody talking about Blockchain Technology?
The simple answer to this question is because Blockchain technology is the future of transactions. The idea of blockchain must sound very complex and unnecessary to the common man. As much as one can hope to survive without having to learn about these things, it is an absolute necessity to keep up with the growing technology. Especially when this seeming-to-be complex technology can make our lives simpler and more secure.
The first thing that comes to our minds when we hear blockchain technology is transactions of cryptocurrency. It is a fact that this blockchain is the future of transactions. However, it is also not limited to monetary transactions. This article aims to give you a simplified explanation of everything you need to know about blockchain technology.
What is Blockchain Technology?
Blockchain is a secure and transparent method of storing a detailed decentralized database, also known as a ledger, in a series of immutable blocks which is shared among a network of computer systems. In further simple words, Blockchain technology is a decentralized public ledger that helps in recording transactions through multiple computers.
Let’s further break the definition down to understand its features better.
- Secure method – The technology uses an advanced level of encryption to secure the process.
- Transparent method – Anyone can join the network and view all the information on a blockchain.
- Decentralized technology – A single entity does not own authority over the database. Instead, all stakeholders will own authority over it.
- Immutable blocks – If users make any changes in the blocks, other users can easily spot them in the copies that they hold through the change caused in the hash.
- Sharing of data – Blockchain data travels through a peer-to-peer network. All participants of the transaction receive this data via cryptographic signatures.
History of Blockchain Technology
Though popularized in the early 2000s, the concept of blockchain was first initialized in the 1990s. Primarily described in 1991, research scientists Stuart Haber and W. Scott Stornetta developed a digital system to avoid tampering with documents. The system helped stamp documents digitally and store them in blocks that are secured in a chain cryptographically. In 1992, the introduction of Merkle Trees enabled the system to add a collection of documents into a single block. This further increased the efficiency.
However, it was in 2008 that the concept of blockchain technology started being used for practical purposes. That purpose happened to be the transaction of digital currencies. Under the pseudonym of Satoshi Nakamoto, probably one person or a group of people worked on the first decentralized digital cryptocurrency, Bitcoin. For this purpose, they put the concept of blockchain into practice as a public ledger for transactions in 2009.
In 2008, Satoshi Nakamoto also released a white paper on the features and characteristics of the technology. This particularly included the fact about the digital trust one can achieve through the decentralization of technology. Now, the technology has evolved and found many more cryptocurrencies for application.
Secure transactions of digital currencies will remain the main reason for the usage of this technology for ages to come. However, the use of this technology is not just limited to currencies anymore.
How Blockchain Technology Works?
Blockchain acts as a digital concept to store data. The main characteristic of blockchain technology is that data is recorded in blocks. These encrypted blocks are connected in a chronological series and shared among the participants of the blockchain and secured through complex math problems. Hence, people also call it Distributed Ledger Technology (DLT).
There are three main aspects to this process – blocks, nodes, and miners.
1. Blocks
Blocks are similar to the pages of a ledger. Each block holds the information of various transactions added. The data once encrypted into the block is immutable. A series of these blocks, connected through hashes in a chronological form, make up a blockchain.
The blocks consist of three unique features –
- Data in the blocks – Users can store any data in the blocks and link the blocks through cryptography.
- Nonce – The full form of the word is “number used only once”. This is a set of unique numbers generated on the addition of a newly encrypted block. Miners work on decoding these nonces to match up to the previous hash. This process is extremely complex and strenuous and thus, the miners receive rewards for solving each nonce and creating the block.
- Hash – Hash is a value generated from a string of text added in the block using mathematical formulae. The hash generated for a block gets permanently attached to the nonce of the block. The value is always of a fixed length irrespective of the length of the block data. Hashes play an important role in connecting the blocks and forming the series of blockchains.
2. Nodes
Nodes in blockchain refer to all the network stakeholders and their computer systems. Basically, after creating a blockchain, all the stakeholders of the transaction receive a copy of the same. Their computer systems are nodes of the network.
3. Miners
Miners create blocks in different blockchains. They do this by solving various mathematical problems and creating unique nonces that are relevant to the required hash. Miners use special software to solve these problems.
Process of Blockchain Transactions
https://www.youtube.com/watch?v=OFWXB6K676o
The process of blockchain transactions is very simple.
1. Creation of Blocks –
The first step is to initiate a transaction. This transaction, before being encrypted on a block, is validated by the nodes. Once considered to be valid, the transaction is added to a block. The block is generated by the miners who use various formulae and generate a unique nonce and hash for the block.
2. Linking blocks –
This block is then added to the series of blockchains chronologically. To ensure the chronology is intact, the new block also has the hash of the previous block mentioned in the header along with its own unique nonce, hash, and transaction details. Since all blocks depend on information from the prior blocks, a strong chain of dependency is created. Hence, it is called the blockchain. This way, the authenticity of the data is protected. If any change is made in any of the blocks, the hash of the blocks placed after that block also changes.
3. Sharing of Blockchain –
The changes can be verified by the other stakeholders. This takes us to the nodes of the network. Once a new block is added to the blockchain, any of the participants of the network can view it on their system. If need be, they are also capable of verifying and validating the transactions.
Types of Blockchain
The usage of blockchains by people differs in various contexts. Accordingly, there are chiefly four types of blockchains –
1. Public Blockchain
As the name suggests, public blockchains are available for anyone with an internet connection to view and use. There is no necessity for any kind of permission to be a part of the network.
Since it is so transparent, this kind of blockchain is suitable for usage in voting by the government, and fundraising activities.
2. Private Blockchain
This blockchain network is smaller when compared to the public network. Usually smaller organizations run this kind of network. The information is available for all stakeholders of the organization but not everyone. Techies also call this network Permissioned blockchains and business blockchains.
The closed network is suitable in cases of supply chain management, and asset ownership records.
3. Hybrid Blockchain
Organizations that wish to implement both, public and private blockchains into their system use this kind of blockchain. The flexibility provides them with a choice to decide what information they wish to keep private within the organization and which to provide access to the public. The use of smart contracts can validate access to the public.
Real estate companies, retail stores, and highly regulated markets like banking use hybrid blockchain in the best way.
4. Consortium Blockchain
Also known as the Federated blockchain, the consortium blockchain is similar to the hybrid blockchain. However, predetermined nodes control who initiates, and validates all transactions in blockchains. Though the other members are also capable of initiating and receiving transactions, only validator nodes provide validation.
The best way to use the consortium blockchain is for payments and banking as various banks can form a network and assign power to validator nodes.
How to use Blockchain Technology?
The usage of blockchain in cryptocurrency transactions is not unknown to anyone in today’s world. The omission of any third party like banks gives the users enough flexibility and transparency in the process. This makes real-time transactions possible even across countries without any hassle or huge transaction fees.
However, there are many other ways to use blockchain technology. Mentioned below are a few of them –
1. Payments and Money Transfers
This is undoubtedly the most efficient way of using blockchain technology. Transactions are low-cost, fast, and extremely secure when compared to other means of processing transactions. Though the hype is all about cryptocurrencies, other currencies can also adopt this technology for better efficiency. There are already many companies using blockchain payments such as Coinbase, Paypal, Circle, Ripples, Abra, etc.
2. Quality Assurance
Any industry with a focus on ensuring that a product meets the required quality standards can adopt blockchain technology. Be it manufacturing and production units, retail companies, pharmaceuticals, or automobiles, any industry definitely cannot compromise on quality assurance. If there is any need to investigate, the processes are well documented and cannot be tampered with. Hence, the process is well-organized and regulated.
3. Smart Contracts
Smart contracts refer to agreements between two parties without any intermediary involvement. Blockchain technology has made this possible through its immutable network. Real estate, healthcare as well as government agencies currently use these contracts.
4. Internet of Things (IoT)
The Internet of Things simply refers to the network of all connected devices through the internet. A perfect example to understand it better is smart homes where the internet connects all devices. With growing technology grows misuse of that technology through hacking. Implementation of blockchain technology in IoT can reduce this breach of privacy issue.
5. Digital Identity Management
Blockchain technology can help solve many problems that digital identity is now facing. The problems include data security, inaccessibility to one’s data, and most importantly identity fraud. One can reduce these problems with the security, privacy, and trust that blockchains provide.
6. Audits
One of the main features of blockchain technology is the immutable characteristic that ensures that any data recorded is authentic. This to a great extent will make the auditor’s job easier. Auditors can review directly by accessing the ledgers on a blockchain.
7. Supply Chain Management
Blockchains can track any goods in an organization as well as in the entire supply management system. Along with this, it can also keep track of other transactions which can ensure the smooth running of a process.
8. Voting
Nations could gain trust in democracy by implementing blockchain technology in the voting process. The transparency and unchangeable quality of the technology can be a game-changer for the nations and can ensure that the process is neutral and secure.
Pros and Cons of Blockchain Technology
Every technology comes with its set of advantages as well as disadvantages. Blockchain technology is no different. It could be its effects when compared to another competent technology or its effects on society. Let’s have a look at some of the major advantages and disadvantages of this technology –
Advantages of Blockchain Technology
- Technology makes it impossible to change or erase any data in the blockchain and maintains an immutable record. This ensures the security of data.
- This also ensures easy traceability of records in case of an audit.
- The fact that anybody with access to the network will also have direct access to the ledger provides transparency. Hence, the decentralization of data makes it trustworthy.
- Smart contracts make the process of transactions even simpler and more automated.
- Storage of documentation in blockchains can completely eliminate the use of paper documentation while improving security and privacy.
Disadvantages of Blockchain Technology
- The application slows down when there are more users of the network.
- There is excessive usage of energy, especially by miners. Miners solve various mathematical problems for the creation of blocks and in most cases, this consumes very high power.
- Though the immutable nature of blockchain is very useful, it is very difficult to make corrections in the data in case of mistakes.
- The cost of implementation and working of the technology is very high.
- The users get private keys to access the network. But in case of loss of this key, recovery is almost close to impossible and can cause a big problem, especially for cryptographic value holders.
Why learn about Blockchain Technology?
Because it is the future! Blockchain is revolutionizing the idea of transactions and data documentation. Though it is just a growing technology at present, it is always wise to learn and get ahead in the game. However, the fact that it is still growing does not in any way undermine the high demand for employment opportunities available in the industry. With high demand, one can expect higher pay too.
In today’s world of easy breaches of privacy, knowledge about using technology to protect our digital identities and personal data should be the utmost priority. Even if employment is not an intention, learning about blockchains can help in making smarter investments in cryptocurrencies. There is no denying the fact that investments are the wiser way of living.
It is a fact that the blockchain wave has begun rolling and everybody seems to be getting on board. All the industries are either already implementing the technology or are planning to. Therefore, wouldn’t it be better to gain knowledge about how the system with our data will work? There are many courses online to learn about Blockchain technology.
Recommended Courses:
Henry Harvin Blockchain Academy – Blockchain Certification Training Course
In addition to the basics of the technology, this course provides an overview of Bitcoin, Hyperledger, Ethereum, and many multichain blockchain platforms. Training will be provided to learn the proper utilization of various tools like Geth, Truffle, Ganache, and Meta Mask. These tools help in building blockchain applications. The academy teaches multiple aspects of mechanisms, advantages, and structures of blockchain technology.
Duration of the course – 32 Hours
Fees – INR 22500/-
Why Choose Henry Harvin?
The academy provides well-rounded and combined training in two-way live interactive sessions. Course trainers are industry experts with at least 10 years of experience. You will undergo projects in the fields of Cryptocurrency, Core layer, Blockchain programming, etc. On successful completion of the course, you will get certification from Henry Harvin Academy. The academy is also recognized by the Govt. of India. Even after the course, Henry Harvin assists with internships as well as assures 100% guaranteed placement for a year. Additionally, you will get a gold membership to the blockchain academy for a year. This also gives them access to unlimited e-learning materials, boot camps, and hackathons conducted throughout the year.
The course is best suitable for functional managers, computer science graduates, core Java developers, aspirational engineers, as well as finance graduates.
The Henry Harvin Blockchain Certification Training Course has also featured in The Hans India and ranks at #1 in India.
You can also find the same course in other cities such as Allahabad, Bangalore, Chennai, Coimbatore, Gurgaon, Jaipur, Mysore, Pune, and Vishakapatnam.
Similar Courses offered by Henry Harvin Blockchain Academy–
- Bitcoin Course
- Post Graduate Program in Blockchain
- Blockchain Fundamentals Course
- Selenium Course
- Blockchain Developer Course
Conclusion
Blockchain technology is here to stay and grow further. It has the potential to impact and revolutionize our ways of documentation and transactions. This change, however, is for a better, safer, and more secure future. Every technology also comes with its negative effects which is why it faces obstacles from society. With a better understanding of the technology and its ways, one can hope to decrease the damage done through this technology and utilize it wisely. Blockchain makes the future seem filled with endless possibilities. With this in mind, it is possible to create the third generation of the internet.
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FAQ’s
Ques 1. What is the definition of blockchain technology?
Ans. Blockchain is a secure and transparent method of storing a detailed decentralized database, also known as a ledger, in a series of immutable blocks which is shared among a network of computer systems.
Ques 2. How can blockchain be used in business?
Ans. The implementation of blockchain technology in business can eliminate middlemen and help in secure documentation and sharing of records and contracts.
Ques 3. Is it possible to create a separate blockchain for business?
Ans. Yes. However, the public blockchain is not the most suitable option. One can create a private blockchain to document and store transactions and data involving the business.
Ques 4. What is BaaS?
Ans. BaaS is an abbreviation for Blockchain-as-a-Service. Nowadays, renting software as a service is trending. Similarly, renting blockchain infrastructure in the cloud is also coming into trend.
Ques 5. What are the key features of blockchain?
Ans. Blockchain is a combination of distributed digital ledgers with cryptographic keys. Additionally, it is decentralized with enhanced security and is immutable.
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