Blockchain Technology: is a technique of storing data in such a way that makes any system updates, fraud, and stealing extremely difficult or impossible. Its working is all about in based on coping and transmitting a digital record of transactions all over the network.
We can also define the blockchain as a distributed digital ledger (containing data about all transactions). All the recording of activities and other related information is gathered at a single point. All this data is permanent (unchangeable, meaning a transaction or document stored cannot be updated).
Blockchain technology is a technique for maintaining common records and information (also called “blocks”) of a system that contains different databases connected through nodes. This type of store is mostly referred to as a “digital ledger.”
The first version of a blockchain-like system was proposed by David Chaum in 1982 in his research Computer Systems Established, Maintained, and verified by Mutually Suspicious Groups.
Later on, Stuart Haber and W. Scott Stornetta worked to expand their work in 1991.
It was all about describing well how to build a chain of blocks that is cryptographically safe and secure and has permanent dates and times. In 2008 Satoshi Nakamoto first promote the concept of blockchain technology.
He worked on the concept by time stamping each block separately without the help of a central authority or management. These improvements were highly creative and that’s how it becomes the basis of blockchain.
Working of blockchain
The working of blockchain is based on three technologies:
- Keys for cryptography
- A system of nodes that uses a public ledger
- A technique of computation that stores the network’s activities and records
The cryptography key consists of two keys:
- Private key
- Public key
These activities help to make the transaction or deal successful involving two sides. These two keys are unique to every individual and their purpose is to make a safe digital identity referencing.
This secured identity is one of the most significant components of Blockchain technology. In terms of cryptocurrencies, we called this identity a “digital signature” that is used to verify and manage transactions.
The management individuals use this Identity in all of their official work and to agree on payments and other issues.
The verification is done after a successful computational transaction between the two network-connected entities.
In sum, Blockchain users use their cryptography keys to perform different types of digital transactions over the network.
Types of blockchain technology
Following we have types.
- Public blockchain
- Private blockchain
- Hybrid blockchain
- Side chains blockchain
In this type, computer systems are independent and open to any individual who wants to make or validate a transfer/transaction (check for accuracy). Transactions are awarded that are approved by miners.
Techniques that are used in public blockchains are Proof-of-work or proof-of-stake agreements. Blockchain technologies for Bitcoin
These blockchains are not public and have limitations to access. Anybody interested in joining, the administrator must give access. It is generally run by a single company as it is centralized.
Consortium or hybrid blockchains include both public and private portions like permission blockchains. But a single partner blockchain network will be managed by multiple companies.
These are commonly very hard to start up but once they get started might provide better security. If you had to work with different companies Consortia blockchains are also ideal.
A side chain is a type of blockchain that stands side by side with the basic chain. It allows users to do their transactions among two different blockchain systems and provides speed and efficiency. the Liquid Network is an example of a side chain.
Advantages of blockchain technology
Here we have some of the benefits of blockchain.
- Safety is the most significant advantage. the information is distributed and continuously verified by billions of devices therefore, a blockchain is almost incorrupt and secure.
- If we see traditional transactional systems, we will notice that it provides us with more effectiveness, however, open blockchains can often have slow speeds and unreliability
- Every ledger of nodes has a replica, so it is stable. if one stops or is interrupted there is no problem.
- It built trust and security between users on the network. Verified blocks are highly difficult to change or remove.
- It commonly has fewer transaction costs by just doing away with intermediaries and third – party therefore It can be affordable.
Disadvantages of blockchain technology
Every technology always has its drawbacks. Some of the blockchain disadvantages are below:
- According to many experts, this technology can ultimately bring risks, challenges, and inefficiencies.
- Regarding accountability and ownership of blockchain networks, many users and management have shown Concern.
- We even don’t know that might be companies are capable or willing to make the investments in blockchain required to produce, participate, and manage a network.
- In this system, we have to do a lot of work to update the system and data.
- users have to keep records of their private keys to secure and avoid loss of money.
- A ledger with a big size for users to download may cause a loss of nodes when memory develops highly large over time.
- Blockchain is sensitive to attacks, a type of attack that can overload other users and cause issues.
What is value for businessmen?
If you have a business and have to do a lot of transactions of every kind, you should take a look at how blockchain technology can enhance and groom your business.
Analyze the risk to the security and settlement of stock transactions to know how many back-office activities and other operations could be seriously affected.
Maybe your clients may demand you to try to look at your procedures digitally if you are in a supply chain of any type. Especially if you are a supplier to huge companies.
Start to consider how you collaborate with your customers’ supply chains and what you may be required to participate in a blockchain.
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