Blockchain is a distributed ledger that is both secure and free of control by any single individual since it contains records with timestamps spread across numerous computers. Blockchain started as a technology that supported Bitcoin however it has now transformed into a technology that can be utilized in several sectors such as finance, healthcare, and supply chain.
Key Features of Blockchain
Distributed Ledger: More than one central body, blockchain is shared across multiple nodes. Every member of the system has their own located copy, as blockchain is stored across a wide array of computers.
Alteration-Proof: It is next to impossible to change or delete any information that has been placed in the blockchain, in fact, once something is entered into the system that data becomes irreversible. This property keeps the information intact which makes it suitable for financial records and other sensitive data which requires high levels of confidentiality.
Openness: Data transfer and other transactions are made public in blockchains. If that is not desired, private or permissioned blockchains can be created.
Data Protection: Blockchains include an encryption process that allows a record to be secure. Every block has a unique code that is called a hash. A hash from the preceding block is also included and additional blocks are then formed. The linking enhances the structure as it makes it extremely difficult to perform certain actions that would alter information stored within that blockchain.
How Does Blockchain Function
Transaction request: A transaction on the blockchain starts when a user makes a request. A request may include the movement of digital assets, storage of data, and smart contracts.
Verification: In a decentralized system like a blockchain there is a need to verify transactions which in most cases involves the use of a consensus for example Proof of Work (PoW) or Proof of stake. These consensus mechanisms are important because they approve all the transactions and prevent the occurrence of double-spending.
Block Creation: Following the verification process, a certain transaction is combined with other transactions and included within a block. Every block contains its specific number (hash) when distinguishing it from other blocks. This hash also details and points to the hash of the block before it enables the forming of a sequence.
Block Addition to the Blockchain: Each new block structure that comes after a certain one becomes a historical fact as it is recorded on the blockchain. In most instances, this process does not have a single point of authority as every user of the network modifies his copy of the record.
Immutability and Distribution: Every single block on the network is encrypted and stored in numerous places preventing the need to have a centralized storage. This makes it practically unachievable as not only would the greatest amount of nodes need reconfiguration but every single sub-sequential block would also have to be altered.
Blockchain Types
Public Blockchains: Used in circumstances where security is third-party provided, easy for anyone to make use of. (eg. Bitcoin, Ethereum)
Private Blockchains: IT firms provide security for their employment. This limits its usage as permission is required. For instance Hyperledger.
Consortium Blockchains: This system has a number of professionals. third parties, such as banks, etc., sharing it, so it is only partially decentralized.
Hybrid Blockchains: It has traits of both the private and the public types so it can be said to be the median of the two types.
Applying the Blockchain Technology
Cryptocurrencies- One of the most trusted forms of digital currency that is decentralized.
Supply Chain- Helps in tracing the origin of products, thus increasing transparency.
Smart contracts- These are coded contracts with the inner details, self-executing, like Ethereum.
Digital Identity- Assist in controlling and securing the virtual identity of people.
Healthcare: Ensure the security of patient records, privacy, and accuracy match with each other.
In fact, with its numerous advantages, it would be exciting to see how Blockchain technology would transform the various industries it applies to.
