How Blockchain changes the world?
1. What is Blockchain?
Blockchain originally named block chain is a decentralized database that stores information in information blocks linked together by coding and extending over time. Each information block contains information about the initialization time and is linked to the previous block, along with a time code and transaction data. Blockchain is designed to prevent the change of date: Once the data has been accepted by the network, there is no way to change it. Blockchain is guaranteed by the design using a decentralized computing system with high byzantine fault tolerance.
The first blockchain was invented and designed by Satoshi Nakamoto in 2008 and was realized the following year as a core part of Bitcoin when blockchain technology acted as a ledger for all deal. By using peer-to-peer networks and a decentralized data system, Bitcoin blockchain is managed automatically. The invention of the blockchain for Bitcoin has made it the first digital currency to solve the problem of double-spending (fraudulent spending when an amount of money is used twice). This technology of Bitcoin has become the inspiration for a variety of other applications.
Blockchain technology is similar to databases, only different from interacting with databases. To understand blockchain, it is important to understand the following five definitions: blockchain, decentralized consensus, trusted computing, smart contracts, and proof of work. This computing model is the basis for creating distributed applications.
Blockchain technology can be known as a combination of 3 types of technologies below:
- Cryptography: Use the public key and hash function to ensure transparency, integrity and privacy.
- Peer-to-peer network: Each node in the network is considered a client and also a server to store application copies.
- Game theory: All nodes participating in the system must comply with the rules of consensus (PoW, PoS ...) and be driven by economic motivation.
From a business perspective, it can be called an accounting ledger, or a database containing assets, or a data structure, which is used to record asset history among members of the network in the peer-to-peer network.
From a technical perspective, it is an invariant method to store the history of asset transactions.
From a social perspective, it is a phenomenon, which is used to establish trust by the rules of consensus among members in a hierarchy.
2. Types of Blockchain
Blockchain created cryptocurrencies, but cryptocurrencies are not all that Blockchain can create, it is also applied to industries such as sea transportation, banking, grocery, law, etc And considered one of the greatest inventions in recent decades, so what makes Blockchain special?
The blockchain system is divided into 3 primary types:
Public: Anyone has the right to read and write data on Blockchain. The process of authenticating transactions on Blockchain requires thousands of nodes to participate. Therefore to attack this Blockchain system is impossible because of the high cost. For example Bitcoin, Ethereum, etc.
Private: Users are only allowed to read data, not write because this belongs to a trusted third party. This organization may or may not allow users to read data in some cases. The third party is free to decide all changes on Blockchain. Because this is a Private Blockchain, the transaction confirmation time is quite fast because only a small number of devices are required to authenticate transactions. For example, Ripple is a type of Private Blockchain, this system allows 20% of nodes to be fraudulent and only needs the remaining 80% to operate stably.
Permissioned: Also known as the Consortium, a form of Private but adding certain features, combining "belief" when joining Public and "absolute belief" when joining Private. For example, Banks or joint venture financial institutions will use their own Blockchain.
3. The future of Blockchain
The presence of Blockchain as well as the milestones when the personal computer or the Internet was found, this system will change the way we understand and recognize society.
- Decentralized opened source code and centralized closed source code.
The current trend in Blockchain development is that Blockchain should be distributed with publicly available source code (open source) or concentrated with separate source code managed by an organization or group of organizations (closed source code).
Blockchain technology will likely develop simultaneously in both decentralized opened source networks and centralized closed source networks. In particular, governments and large organizations will choose one method while individual developers, small-scale projects and startups will choose another.
- Distributed ledger
Distributed ledgers are currently very closely related to Blockchain, and it is argued that distributed ledgers are based on Blockchain. However, distributed ledgers can operate without using Blockchain. When startups and development activities are based on Blockchain, the ledger that does not need to be based on this platform will become an emerging trend in the future.
- Fewer cryptocurrencies - More Blockchain tokens
Like many other industries, when it first appeared, there were many digital currencies created every day and competing with each other. But in the future, it is likely that only a few digital currencies exist and are largely accepted as a form of payment.
This trend is taking place because many newly launched Blockchain projects use tokens on existing blockchains such as Ethereum instead of creating their own digital currency.
Cards - similar to cryptocurrencies, can be exchanged on Blockchain for shopping purposes. However, the card works on an existing Blockchain and each card represents the value issued on the currency of another Blockchain. For example, the Ethereum Blockchain uses a native currency called "Ether."
Cards allow programmers and organizations to create applications that operate on a Blockchain or their digital currency.
- Blockchain 2.0 - Decentralized applications and smart contracts
Blockchain 2.0 is the term that describes the new function of Blockchain that exists today compared to the original source code. The Ethereum platform has realized the setup and operation of decentralized applications and smart contracts on the Blockchain.
Decentralized applications and smart contracts built on the Ethereum network or other current blockchains that use tokens instead of digital currencies are a growing trend and show no signs of going down.
- More rules and approvals
There are still many critics and concerns about Blockchain technology, Bitcoin is a prime example of this situation. Many criticisms are made because Bitcoin is a viable Blockchain technology application, widely accepted, global and famous in the world. Blockchain is still in its infancy, closely related to Bitcoin, and many open-source cryptocurrencies are created every month.
Despite this, governments will continue to attract startups in the field of Financial Technology in collaboration with banks, businesses and financial institutions to create jobs, promote trade and develop Developing economy through new technology based on Blockchain.
- Blockchain in daily life
While the decentralized opened source application is built on newly created personal federation blockchains, the use of Blockchain will increase in every aspect of our lives.
Blockchain technology may not replace existing intermediaries such as banks, companies like Google or Grab as some people have predicted, especially in the short term. However, even if intermediaries are not replaced, you will eventually come across Blockchain technologies from distributed Blockchain ledgers at work, smart contracts, decentralized applications. or may decide to choose a Blockchain-based solution that replaces existing options in many areas of life.