What is blockchain and how can you apply this technology to your particular business domain or potential start-up. we will discuss all of these aspects, along with real-world applications of blockchain and uncover the benefits that this technology offers.
Well, I've also heard people saying blockchain is Bitcoin. The only application of blockchain is cryptocurrencies and blockchain can only be used in the financial sector, which is not true.
What is blockchain Technology
But it had never been so important until it was adapted by its Toshi Nakamoto in 2009 to create a digital cryptocurrency Bitcoin. It is the first blockchain-based cryptocurrency.
Blockchain It's an online distributed system, which can store information that can store information, and it's based on interconnected blocks which are open to everyone. Like it's clear from his name blockchain is the chain of connected blocks, which can store information.
There are three things on every block that is the information we store on block and that depends upon the type of blockchain, for example, cryptocurrencies.
- They store information about the sender-receiver and transaction.
- Every block contains the hash of that block and that hash is the fingerprint of that block.
- Third, and the last thing, every block contains is the hash of the previous block which connects the current block with the remaining blockchain, and that's the property that makes this technology so secure.
There's also another property, which makes this technology more secure is its peer-to-peer nature of work.
Like instead of having a central authority, which normal banks have a central authority which contains all the information about every other block and then manage blocks, the blockchain allows everybody to join, and whoever joins gets information about every other block.
And by using that mechanism, we can identify and prove
that everything in the blockchain is in order and nothing got cheated.
It will be better efficiency, less oversight, reduced intermediaries, and enhance privacy and audibility. The possibilities for use of blockchain are limitless like the internet, with many of the companies already running a pilot project in this technology, and analysing the opportunities in this nascent market are there for the day.
Let's take some real-life examples, which will clarify these points.
There are three friends.
Anna. Carmen, and cola. Anna has a hundred dollars, Carmen has $60 and cola has $40. Anna and Carmen, they are already in the blockchain. So they both know about each other, Carmen knows, Anna has a hundred dollars, and Anna knows Carmen has $60. If cola wants to join the blockchain.
He has to provide the proof that he owns $40, and based on that proof. Anna and Carmen can accept or reject him to the blockchain.
If colo has been accepted into the blockchain. So now he will get a copy of the information about Anna and Carmen as well. So, all three of them now know about everybody how much a single person owns.
Let's say there is somebody who wants to cheat the system. For example, Carmen. She wants to spend $200 on colo. But this transaction cannot happen because colo and Ana, they already know, Carmen only have $60, so she cannot do the transaction, which is more than $60.
How Blockchain Technology work
Blockchain may be a distributed ledger, that's fully hospitable anyone. they need a noteworthy property. One some knowledge has been recorded within a blockchain, it becomes terribly tough to vary it.
let's take a more in-depth inspect a block. every block contains some knowledge, the hash of the block, and therefore the hash of the previous block the information that's hold on within a block depends on the sort of blockchain.
The Bitcoin blockchain, for instance, stores the main points a few dealing in here, like the sender-receiver and therefore the variety of coins, a block additionally incorporates a hash, you'll compare a hash to a fingerprint. It identifies a block and every one of its contents and it is often distinctive, even as a fingerprint.
Once a block is formed. Its hash is being calculated, ever-changing one thing within the block can cause the hash to vary. So, in alternative words, hashes ar terribly helpful after you wish to notice changes to blocks.
If the fingerprint of a block changes, it now not is that the same block.
Here we have a sequence of 3 books. As you'll see, every block incorporates a hash and therefore the hash of the previous block.
So, block variety 3 points to dam variety 2 and variety 2 points to favored.
The third part within every block is that the hash of the previous block. And this effectively creates a sequence of blocks. And it's this method that creates a blockchain therefore secure.
Let's take an associate example.
Now the primary block may be a bit special. It cannot purpose to previous blocks as a result of whereas it is the initial one. we have a tendency to decision this block the Genesis block.
So, to mitigate this blockchains have one thing that's referred to as proof of labor. it is a mechanism that slows down the creation of the latest blocks in bitcoins case, it takes concerning ten minutes to calculate the desired proof of labor and add a replacement block to the chain.
Now, for instance, that you simply tamper with the second block. This caused the hash of the block to vary in addition. In turn, that may build block 3 and every one the subsequent block's invalid.
Because they now not store a sound hash of the previous block. So, ever-changing one block can build all the subsequent blocks invalid. however, mistreatment hashes aren't enough to stop the change of state.
This mechanism makes it terribly laborious to tamper with the blocks as a result of if you tamper with one block, you will need to work out the proof of labor for all the subsequent blocks.
The node will use this to verify that everything continues to be so as. Now, let's have a look at what happens once somebody creates a replacement block that's sent to everybody on the network.
So, the safety of a blockchain comes from its inventive use of hashing. and therefore, the proof of labor mechanism. however, there's another manner that blockchains secure themselves, which is by being distributed.
Instead of employing a central entity to manage chain block, chains use a peer to look network and everybody is allowed to affix. once somebody joins this network, he gets a full copy of the blockchain.
Each node then verifies the block to form certain that it hasn't been tampered with. And if everything checks out every node adds this block to their blockchain all the nodes during this network produce agreement, they agree concerning what blocks are valid, and {which arn't|which are not} blocks are tampered with are rejected by alternative nodes within the network.
Blockchain miners have to be compelled to solve a fancy mathematical downside, the method of finding the advanced mathematical downside is named proof of labor, and therefore the method of adding a block to the blockchain is named mining.
Why do we need Blockchain technology
There are several reasons for every technological change. First, why do we have to pay a third-party huge amount of an extra fee, just to do a transaction between two already agreed parties, if we can do that transaction more efficiently and in a secure manner, just by depending on technology and the transactions, which normally take days to process, we can do that in almost real-time by using this technology and without even paying that huge amount of extra fees.
For example, if I'm buying the medicine, how I am sure that it is coming from the same manufacturer, which is written on the box, or the date which is written on the box is correct, by just looking at the stamp, or the label, I can see on the box. In the end, I must trust the seller. It doesn't end here. How many of you have ever bought something online?
For example, e-commerce platforms like Amazon, Flipkart, eBay.
We don't know the seller. The only thing we can see is rating reviews, sometimes feedback. And we are also not sure that that's the original one, or it's just faked. And I am supposed to send the money, even before receiving the product.
What if I will never receive the product.
Will I get my money back
We need this technology because it can save time, it can save money.
What can be the future of this world If we use this technology in several of these cases like starting from supply chain management, in which we manage the whole process of a product or service from manufacturing to the delivery.
During this process, a product goes from multiple channels and every channel is owned by a different company or at least a different department.
And if we need information about the product. Sometimes they need some more time to give us information, and in the end, we will get the information but we delay or sometimes we don't even get it.
If we implement blockchain or if we put this supply chain management process into the blockchain. We can see where exactly our product is how long it will take to reach us. we are sure because of the blockchain. The information we are getting. It's not changed, or it's not cheated.
If we take another example of the real estate business. It can make our lives easy. We buy and sell the property. Normally we go through several processes. Several verifications like government offices.
Landlords’ authentication of ownership. we are also not sure that the information we are getting is actually original, or it's just changed.
If we use blockchain. In this scenario, the first thing we will be sure of is that the information we are getting is authentic.
Secondly, we can see who the previous owners, how long they stayed.
When the last renovation was and who is currently owning the property. And on top of that, without any paperwork.
One more example let's put yourself into a situation where you need a specific blood group. You have to call hospitals, blood banks, or some foundations. Why don't we put this information into a public ledger.
Where everybody can see that from where they can get that specific blood group. Without even contacting any third party.
Use of Blockchain technology.
Suppose a person has great intelligence and a wonderful business idea and looking for a startup.
In some perfect scenarios, he doesn't have to pay any bribe or he doesn't have to convince any officials.
Looking for finance but unable to get a loan as a bank doesn't have security because they cannot see any previous record of that person, or they cannot see any authentic documents of that person.
If we use blockchain. In this scenario, first, that person doesn't need any third party to rely on. He can start his own business without even including any second person, then every public document related to that person will be available worldwide. And because of blockchain. The banks will be sure that this document is not cheated with or they are not changed. So, these are original.
Although blockchain is not the solution to every problem. But, the future of this world can be great if we let this technology grow in different areas, blockchain technology has the potential to change the way.
These are some perfect examples where blockchain technology could be the solution.
let's take a look at just some of its potential uses.
- The first is banking, the existing banking system is complex, and often slow due to multiple layers of intermediation blockchain provides a secure way of sending digital assets.
- Without these third parties. Not only could this simplify the banking process, but it could also open the doors to those with no previous access to financial services.
- Next is real estate, Without the need for middlemen, this sector could also see vast changes blockchain can process title deeds, facilitate transactions, and even grant access to properties, through smart keys. The technology could streamline property sales, saving buyers time and money.
- In third is legal services. Similarly, real estate blockchain could disrupt the practice of law through smart contracts. These are legally binding contracts that are written in code, so they can be executed exactly as intended.
- Next, we have online voting blockchain companies exploring the potential to digitize voting systems.
- The fear of hackers manipulating online votes could be put to rest by encrypted blockchains, creating a transparent and secure voting system.
- Next up is food production blockchain technology can also be used to simplify the way we produce food tracking goods from farm to fork efficiency in the supply chain would mean more profit for companies, improved food safety, and fresh produce.
- The aviation sector, Airlines who is exploring the capacity of blockchain to speed up passenger identification and processing.
- It could cut down the amount of time spent in keys on passports that could be stored on the ledger itself.
- Following this is a personal identification blockchain that could merge all sources of ID into one open-source, and secure record.
- This would reduce theft and also documentation while protecting the individual's right to privacy.
- The ninth use is music rights blockchain can be used to improve the rights of producers and musicians in an era of digital streaming the ledger could facilitate instant transmissions of artistic royalties each time a song is played online.
- Healthcare industry. It's exploring the potential of blockchain in the exchange of data to improve transparency and patient privacy.
Some smarter devices can be clubbed with electronic health records, which can facilitate real-time monitoring of patient’s data by the doctor.
Blockchain can help to create a single easily accessible universal health record for each patient and can give patients more control over their medical records.
Limitations of Blockchain Technology.
We've talked about the benefits and the value of blockchain. But we also need to focus on the limitations of blockchain because of some problems with blockchain technology not make the right choice for many different situations.
Blockchain is at a very early stage and people don't know the true value of blockchain and how they can implement it in different situations.
- There are a lot of developers that do a lot of different things but there is not that much-specialized expertise in blockchain. And that lack of developers is a hindrance to developing anything on the blockchain.
- Another key limitation of blockchain is due to one of its key strengths, and that's the fact that blockchain is immutable. when you think it through the fact that it's immutable implies that you cannot make any changes to any other records.
- That's wonderful. If you want to keep the integrity of a record and make sure that nobody ever tampers with it.
- But it's a horrible thing if you need to make any revisions, or you need to go back and make any reversals, say somebody processes payment and needs to go back and make an amendment to change that payment. The answer is if you're using blockchain that's simply impossible.
- Now the key problem with blockchain is the concept of key management, as we mentioned blockchain is built on cryptography and cryptography implies there are different keys you have public keys you have private keys.
- But when you're dealing with a private key, you're also running the risk that somebody may lose access to their private key.
- This happened a lot in the early days when Bitcoin wasn't worth that much, people would just collect a lot of Bitcoin and suddenly forgot what the key was and those may be worth millions of dollars today, but by now it's too late.
Conclusion
Although Interesting blockchain has increased in recent years, given the popularity of cryptocurrencies like Bitcoin, or the smart contracts platform, aetherium, that is the blockchain as their underlying technology, but notes aside, people are still exploring and finding new ways of implementing blockchain technology in daily life, due to its versatility, resulting in new and innovative applications.
Some of them are voting and consensus property ownership documents and certificates, supply chain business decentralized storage, with all of this in mind, it is possible to say without a doubt that blockchain technology is revolutionary in the future.
