Blockchain - What, How And Much More

 

Blockchain is a very new and not very well understood topic, with the recent hype came many myths and misconceptions about the topic. The most widespread misconception is that blockchain refers to bitcoin or that blockchain is primarily used in finance. This is due to the fact that most people are not well-informed about it, and it may be confusing at times. However, we'll discuss blockchain in layman's terms today.

 

What Is Blockchain?

 

When a transaction occurs, several entries in a ledger are made, one in the sender's books, one in the receiver's books, and another in a single or many central third party institutions that validates the transaction. For example, if you want to send $100 to a friend in Somalia, you must update the transaction details in both your and your friend's ledgers. The problem is that there are many other ledgers owned by banks and other financial institutions between you and your friend, and each of these ledgers must be updated. This will, of course, take time and cost money. As a result, the money your buddy receives will be lesser and will take longer to arrive.

If, instead of this system, we had a single global ledger in which everyone, including banks and financial institutions, was a participant. Now you just need one entry, which must be checked by each global ledger participant. This notion of a global ledger lies at the heart of every blockchain. When a new transaction occurs, it is added as new block to the chain of previously existing blocks.

 

So to summarize Blockchain technology in one sentence we can say, it is a collection of interconnected records that are highly resistant to change and protected using cryptography

 

Working Of Blockchain

Each block includes data, a hash code, and the preceding block's hash code. A hash is similar to a block's fingerprint, and it is used to differentiate it from other blocks. Every block is interlinked in this fashion, and if someone tries to tamper with the data inside a block, the hash code of the block will change, and if the hash of one block changes, the hash of the next block will change, and so on. As a result, changing data within a blockchain is nearly impossible.

Another reason for blockchain's security is that it is kept on a global network of computers. Every blockchain member has a copy of it on their PC. These people are known as Nodes, and some of them are Miners because they allow the blockchain to function on their computers. Every time new data is uploaded to the blockchain, the miners are responsible for verifying it.

 

Let's use an example to better grasp this, imagine a group of friends who have chosen to play a game. In this game, each player contributes $100, therefore if there are ten players, the total sum collected is $1,000. Then they have a lottery, with the winner receiving all of the money.

You don't trust a single individual in this system; instead, your trust is distributed across the game's participants. To cheat in this game, one must sway the majority of the players, which is far more difficult than swaying a single central authority. This game functions in the same way as blockchain does. Notice how the greater the number of participants in the game the harder it is to cheat, similarly larger blockchains are more secure.

How Blockchain Can Be Used?

 

The primary service that blockchain delivers is that it improves transaction trustworthiness and security. As a result, this technology may be utilised wherever transactions take place. Money, products, services, data, and other types of transactions are all possibilities. examples of application -

 

·       We have to trust a central organisation to function honestly since we have no way of knowing if our vote is being counted or not while voting. Here, blockchain may be utilised to make elections more trustworthy, secure, and fair. Despite the fact that some experts feel it has more disadvantages than benefits, it is still worth exploring.

·       There have been several instances of persons manipulating their mark sheets or other papers in order to get college entrance or jobs. Using blockchain technology, may be prevented since tampering with data contained in a block is extremely difficult.

·       When purchasing on an e-commerce website or, more recently, an Instagram store, you must have complete faith in the seller to deliver your product after payment or vice versa. This problem can be handled with blockchain technology.

·       In several nations, there have been multiple instances of government documents being hacked or released. Blockchain technology may be able to help with this as well.

 

Conclusion

 

It will be difficult to conceive any platform being built in the next decade without the use of blockchain technology. This technology has the ability to transform the entire globe. There have been predictions that it will usher in a greater revolution than the Internet.