What is Blockchain? The benefits and How Blockchain Works

 2020-06-24

What is Blockchain? The benefits and How Blockchain Works

Blockchain is still a novel term in the world of technology and digital marketing. So, What is blockchain? How does it work? Who is using blockchain ?. And some reviews about whether this is the future of technology, of digital marketing?

In this article, we will take a closer look at blockchain, concepts and recent applications and the near future!

What is Blockchain?

Digital information is distributed but not replicated. Blockchain technology has created a stronger backbone for the internet environment.

Initially, blockchain was developed for the digital currencies, Bitcoin. The modern technology community has found potential applications from this technology.

Blockchain, in simplest terms, is a series of immutable data records. Timed and Managed by a cluster of computers not owned by any entity.

Each of these BLOCKS of data is secured and bound together by encryption rules called CHAIN. So blockchain is also known as the blockchain.

Blockchain is an unbreakable digital ledger of financial transactions, can be programmed to record not only financial transactions but almost valuable things.

Blockchain technology

In the financial industry, clearer applications and revolutionary changes are imminent. Blockchain technology will change the way the stock exchanges, loans and insurance contracts work.

Blockchain technology will eliminate bank accounts and services provided by banks. Almost every financial institution will go bankrupt or be forced to fundamentally change,

Recently, the financial system is built on cutting a small amount of your money for a transaction. If once the advantages of a secure ledger there are no transaction fees to be widely understood and implemented. Bank staff will become mere advisors, not cashiers. Securities brokers will no longer be able to earn commissions and the buying/selling spread will disappear.

What is blockchain technology?

Blockchain technology is described: A party to the transaction begins the process by creating a block. This block is verified by thousands, perhaps millions of computers distributed on the network. Verified blocks are added to a chain, stored online, created not just a single record, which is a unique record with a unique history.

Blockchain technology does not generate transaction costs (Infrastructure costs do, but there are no transaction costs). Blockchain is a simple yet ingenious way to transfer information from A to B automatically and securely.

Blockchain Wallet

If you want to take advantage of blockchain technology, you should be familiar with blockchain wallet (blockchain wallet) and how it works. In fact, the number of blockchain wallets reached more than 25 million users at the end of June 2018.

Blockchain Wallet is a digital wallet that allows users to manage bitcoin and ether. Blockchain Wallet is provided by a software company BLOCKCHAIN. Founded by Peter Smith and Nicolas Cary.

The purpose of Blockchain Wallet is just a place to store Bitcoin, Ethereum, NEM, Dash, not a place to purchase and trade.

How blockchain works

A spreadsheet is duplicated thousands of times on a computer network. Then imagine that this network is designed to regularly update this spreadsheet and that is the basic principle of blockchain.

Information stored on a blockchain exists as a shared and continuously regulated database. This is an obvious benefit of using the network.

The blockchain database is not stored in any location. This means that the records it keeps are really public and easy to verify. There is no centralized version of this information for hacker access.

Reasons why blockchain became the 4.0 technology trend:

  • It is not owned by any particular entity
  • Data is stored in an encrypted form
  • Blockchain is immutable, so no one can interfere with the data inside the blockchain
  • Blockchain is transparent so that people can track data if they want

3 core values of blockchain:

  1. Transparency
  2. Immutability
  3. Decentralization

These three characteristics drive blockchain technology powerful. And many technology developers are interested in finding an approach to the application. Below is a detailed analysis of the three characteristics mentioned above:

Transparency

One of the most interesting and misunderstood concepts in blockchain technology is user transparency. Some people say that blockchain gives you privacy while some say it is transparent. Why do you think that happens?

Blockchain encodes transaction data

A person's identity is also hidden through complex cryptography and is only shown by their public address. So if you're looking for a person's transaction history, you won't be able to see that information. All were encoded in the form of character strings such as: "hhacsacksMalcflsa3dvfabdhSwf ...."

So while the real identity of the user is confidential. We will still see all transactions made by their public addresses. This level of transparency has never existed before in a financial system. It adds that a higher level of responsibility, and is essential.

Immutability

Immutability, in the context of blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.

The blockchain has this property due to the cryptographic hash functions.

Cryptographic hash function

Put simply, hashing means taking an input sequence of any length and giving the output a fixed length. In the context of cryptocurrencies like bitcoin, transactions are conducted as inputs and run through a hashing algorithm (Bitcoin using SHA256) that yields a fixed-length output.

A cryptographic hash function is a special class of functions that has different properties making it ideal for encryption. There are certain properties that a cryptographic hash function must have in order to be considered secure.

Decentralization

You have a centralized entity that stores all data and you must interact solely with this entity to receive any information you request.

Another example of a centralized system is the banks. They store all your money, and the only way you can pay someone is by going through the bank.

In a decentralized network, if you want to interact with your friends, you can do this directly without going through a third party. That is the main ideology of Bitcoin.

You are responsible for your money. You can send your money to anyone you want without having to go through the bank.

So, what happened?

A decentralized system, information is not stored by a single entity. In fact, everyone in the network owns the information. And that fact may still have gaps:

Because they are centralized, all data is stored at one point. This makes them easily a target for hacker behaviours

If the centralized system gets a software upgrade, it will stop the entire system

What is the worst-case scenario, if this entity is corrupted and malicious? If that happens, all data inside the blockchain will be compromised,

Interestingly, after Bitcoin and BitTorrent came along, things changed.

Who will use the blockchain?

Blockchain has the ability to cut off middlemen for these types of transactions. Personal computers became accessible to the public with the invention of a user interface (UI), in the form of desktop computers.

Similarly, the most common UI created for blockchain is apps called Wallet apps. People use to buy everything with Bitcoin and store it along with other cryptocurrencies.

Blockchain provides internet users with the ability to create value and validate digital information.

  • Smart contracts (Smart contracts)
  • Sharing economy
  • Crowdfunding (Crowdfunding)
  • Administration (Governance)
  • Supply chain auditing
  • File storage
  • IoT
  • Data management
  • Trading securities (Stock trading), etc.

The technology of the present and the near future

As a technological revolution, Blockchain is really a mechanism to bring people to the highest level of responsibility. No more missed transactions, human or machine errors, or even an exchange not made with the consent of the parties involved.

Moreover, the most important field that Blockchain helps is to ensure the validity of the transaction. By recording not only on the main register but also the distributed registry system connected. All are connected via a secure authentication mechanism.

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