You might have heard the term ‘blockchain’ which is usually associated with cryptocurrencies. But blockchain technology is much more than just cryptocurrency.
Blockchain technology has toppled the notion that no data is ever secure on the internet. Today, we will discuss what a blockchain is, how it works, and its uses.
What Is A Blockchain?
Blockchain is a secured database that allows peer-to-peer sharing of information. In simpler terms, it is an advanced database system that allows transparent data sharing between systems. The technology was developed by an anonymous group/person under the pseudonym Satoshi Nakamoto.
Blockchain databases store the data as blocks, each with a definite time stamp and ordered chronologically. This makes it difficult to manipulate, tamper, or delete the data. This feature allows you to create unalterable ledgers for payments, data transfers, and other transactions.
How Does Blockchain Work?
Blockchain is a highly secured database that can be shared. The thing that demarcates it from the traditional database is the way the data is structured and arranged. Blockchain technology works in four steps:
- Recording Data
The database records the following information regarding the transactions or the data entered.
Who was involved in the transaction, the time when the transaction occurred, the place where the transaction occurred, why the transaction occurred, what happened during the transaction, and what asset is being transferred?
- Consensus:
The people present on the blockchain network must consent to the transaction and agree that it is valid. The rules vary between different networks.
- Linking:
The data on the blockchain are transformed into blocks which are linked using chains called hash. When the data on a block is changed after it is on the blockchain network, the hash value changes.
This implies that the data has been tampered with and is easy to track. The blocks and the chains are linked securely, preventing any manipulation.
- Sharing:
This immutable ledger can be shared with the participants. The blocks or the data on the network are difficult to edit, thus ensuring the security of the transaction.
How Is Blockchain Used?
Blockchain technology has been in development for decades. But it’s only been a few years since its successful implementation.
The power to track back all the manipulations and alterations of data has changed the way the world transacts. These are the various areas where blockchain technology is currently used:
- Cryptocurrency: Cryptocurrencies are one of the pioneers that used blockchain technology. Decentralized currencies like Bitcoin, Ethereum, Litecoin, and many more, use blockchain technology to store and transact virtual denominations. While fiat currencies operate under a central authority, cryptocurrencies require no such authority and operate across a network of computers. The crypto tokens are stored in crypto wallets that make use of blockchain technology, where they can be safely stored.
- Finance: The banking sector benefits the most from blockchain technology, as it cuts short the long waiting periods for transactions. While all financial institutions operate only during business days, blockchain never sleeps. The technology also allows safe and secure transactions, where manipulations can be easily identified. Blockchain can handle any size of data, which can help banks to transfer huge sums of money, effortlessly.
- Medical: Hospitals and medical institutions can use blockchain technology to safely and securely store patient details. Large records can be easily managed and stored using blockchain. The technology also prevents leakage or manipulation of the data.
- Voting: Blockchain technology can be used in voting machines and servers to ensure fairness. Voting fraud and manipulation can be prevented and tracked by making it a part of blockchain technology. This also eliminates the need for recounts and provides instant results. The fabric of democracy can be safeguarded using blockchain technology.
Conclusion
There are many more applications for blockchain technology. Only a few, of the most important uses of the technology have been mentioned here. Blockchain technology has been advancing at an unprecedented rate.
What started as a secure storage solution has branched out to several fields. Blockchain technology is sure to positively affect businesses and industries in the coming years, by providing an efficient, fast, and secure database for the transaction of funds and data.
