Is Blockchain Technology the new era?
This technique was originally introduced in 1991 by a group of technical researchers. They used it to digitally time stamped the digital documents to avoid backdates and tampering with them, just like a notary.
Later in 2009, Satoshi Nakamoto, a pseudonym for a group of people created an ingenious invention ‘Bitcoin’ – a digital cryptocurrency that uses Blockchain Technology and has evolved to something greater since then.
What is a Blockchain?
As the name suggests, blockchain is a group of blocks containing information connected in a chain. Blockchain Technology is the new internet, a distributed ledger, where the data is recorded and cannot be easily tampered with. Blockchain Technology allows distributing digital information but forbids copying it.
How does it work?
Each block contains three elements:
- Data: It is any data that is recorded in the Block. The type of the Blockchain determines the data. For example, a bitcoin Blockchain records the details about the transaction like sender, receiver and the amount transferred.
- Hash: Hash is a fingerprint of the Block. Such as a fingerprint, each block has a unique hash that identifies the block and its content.
The hash of the block is calculated once the block is created, changing something inside the block will change the hash. When the hash (fingerprint of the block) changes, it no longer is the same block.
- Hash of the previous block: This element creates the chain of the secured blocks; it contains the hash of the previous block. Please refer to the below image, each block has its hash and has of the previous block.
Block 3 points to Block 2 and Block 2 points to Block 1. Block 1 is a special block; it doesn’t point to any block as it is the first block. This block is known as Genesis Block.
What makes Blockchain secure:
- Element storage of each block: This if you tamper with Block 2, it will change is Hash. This will make Block 3 and its following block invalid making the entire chain invalid.
Setback: Computers these days can recalculate hundreds and thousands of hash per second. Tampering the block and recalculating it can make the Blockchain valid again.
- Proof of Work: Proof of Work is a mechanism that slows down the creation of new blocks. For example, in bitcoin, it takes at least 10 minutes to create a new block and calculate its proof of work. So if you tamper with one block you need to recalculate the proof of work for all following blocks.
- Distributed Network: It is a peer to peer network where everyone is allowed to join. Every time when somebody joins in this network, he will get the full copy of the Blockchain and the nodes verify that everything is in order.
What happens if you create a new block?
That block is sent to every one of the networks and each node verifies the block that has been sent to the network. When the block is verified, it is added to its Blockchain.
The nodes in this network create a consensus that agrees about what blocks are valid and which aren’t. The tampered blocks are rejected by other nodes.
Blockchain vs Wikipedia
Blockchain may look like Wikipedia (a platform to store information by multiple users) but works differently.
- Blockchain allows many people to record information in the blocks and a community of users controls how the record of information can be amended or updated. Just like Wikipedia, entries are done by multiple publishers and no one person controls the information.
- While both works on the distributed network, Wikipedia works on the Client Server Model.
For example, a user (client) with the required permissions can change the records stored on the centralized server. Whenever the user accesses the same records, they will get the updated version (master copy) from the server.
The digital backbone of Wikipedia is highly protected and its centralized Database is controlled by its administrators allowing them to access the records or pass on the permissions to the users.
However, the digital backbone of Blockchain Technology is fundamentally different. This is the most distinct property of Blockchain Technology.
In Blockchain technology, when the record is being changed, each node in the network comes to the same conclusion and updates their records respectively. Regardless of the official record, the most popular record becomes the Master Copy.
This difference makes the Blockchain Technology distinctive and valuable. The groundbreaking concept waives off the need for a trusted user to facilitate digital relationships.
Blockchain Technology defines the digital trust. It gives a guaranteed safe and secure way to transfer any digital property from one user to another by letting everyone know about the transfer and creating the legitimacy of it.
Like physical assets, Blockchain signifies any digital assets.
In the Digital world, trust is a risk judgment and comes down to the authentications and authorizations of the parties. In simple words, when you meet someone online, how do you know they are who they say they are?
Private Key Cryptography is a powerful ownership tool. The possession of the private key validates the ownership. Having private key spares the user to share additional information required for the exchange and save from exposing them to the hackers.
Though authentication is just not enough, we need authorization as well. Authorization is broadcasting everything on a distributed peer-to-peer network from the starting point. A distributed network reduces the risk of centralized corruption or failure; also it must be dedicated to the transaction network’s recordkeeping and security.
Authentication and Authorization of Blockchain have defined the digital trust and allowed users for safe and secure exchange without expensive. This technique has allowed industries to reflect on the implications of this technology wherein all the possible, powerful and unimagined digital relationships are at the horizon.
Blockchain technology is often termed as the digital backbone of the transactions building a digital trust amongst internet users. This technology could be used to store medical records, creating digital notary or to collect taxes.