What is Blockchain?
The ledger is often used to track and manage asset ownership, however, Blockchain can be a simple record-keeping system for any kind of data – whether that data is related to asset ownership or not. Although Blockchain is often described as a new and cutting-edge technology, the truth is that Blockchain is nothing more than a combination of old concepts, technologies, and methodologies.
These old components include ledgers, cryptography & peer-to-peer networking as well as thoughts like consensus & immutability but in a better and comprehensive manner. At the core of Blockchain is a ledger, a record-keeping system which allows the keepers of a ledger to tell a story.
The story I normally start from is the barter system (goods against goods system) where 100 people are living in the street and 2 of them want to trade for a transaction. Let’s consider their names as Hamza & Arez. Hamza wants to have some gold while Arez wants some wheat. In this context, they gather the remaining 98 people and announce this transaction. At first, they verify that they are trading on their own goods. Then, after the verification, they announce the changing of the ownership. In this example, the transaction will be saved in memory of all 98 individuals involved, which will serve as the ledger.
As you see, the above story revolves around the ownership and history of the ownership of assets. Although ledgers are usually used to record financial transactions, however, they can also be used to record just about any type of data imaginable. The earliest ledgers in human history appeared over 7,000 years ago and marked a key development milestone in human society, culture, and economics.
Another core component of Blockchain technologies is cryptography – the study of how to pass information back and forth in the presence of adversaries, bad actors, or simply audiences with no knowledge. Although cryptography is often thought of as a cutting-edge discipline, it is really quite ancient. As long as there have been two or more people who wished to keep a secret from someone else, there has been cryptography.
Here in Blockchain, we use cryptography to protect anonymity, to provide ledger immutability, and to validate claims that people make against assets tracked and managed on the Blockchain. The 3rd technology, as mentioned above, is the computer networking technology, specifically peer-to-peer network architectures. The same technology that serves as the backbone of our modern internet also underlies Blockchain (always remember the Internet is underlying technology of Blockchain & Blockchain is underlying technology of DApps). Adding peer-to-peer (P2P) network architectures in the mix increases redundancy along with fault tolerance and makes it resilient by removing single points of failure commonly found in typical network architectures.
Misconceptions about Blockchain
Blockchain became a buzz word in last few years, following are few misconceptions about Blockchain:
• Blockchain = Bitcoin (it’s not)
• Blockchain can only be used for financial sector
• Everyone can see private information on the Blockchain
• Smart Contracts have the same legal value as regular contracts
• Blockchain can only be public
Technologies behind the Blockchain
Blockchain is a combined use of existing older technology.
- Ledger – 7,000-year-old technology, triple-entry accounting.
- Cryptography – “coding messages” has been used for thousands of years, and still used in complex S/W algorithms for military and business applications like Blockchain.
- Computer Networking Technology –Blockchain makes extensive use of P2P networking architectures.
Why is Blockchain required?
Blockchain is one of the most important & revolutionary technology of this era, like the internet was in 1990’s. Let’s talk about few advantages of the Blockchain technology:
• You get a history of all the activities, when you look at a regular database, you’re getting a snapshot of data that’s up to date in that moment in time. Blockchain does this too, but it also maintains a complete record of all the information that existed before. It is a database with history archives if you can say it that way.
• No one is able to hack the central point. The fact that Blockchain is a decentralized way of storing and accessing data makes the whole system incredibly secure – because, unlike a centralized database, there’s no one single point of entry or failure for hackers. This makes it particularly useful for recording transactions in more secure manner, and makes the data more secure.
- And no centralized control. Because the system of record is decentralized and replicated in its entirety in multiple places, there’s no need for a central administrator and all the costs and infrastructure that comes with it, so you can save a lot of money as you are using the multiple nodes to save the data or we can say the copies of the same data.
As mentioned above, this a very important technology in the upcoming world, before this pandemic most of us were unable to understand how we can save money through “work from home concept”.
This revolutionizing technology can change the paradigm of the economy with:
• Digital Documentation
• Digital Certificates
• Digital Currency
When economy will shift towards the digital economy, just think how much we can save with this eco-system.
Use-Cases of Blockchain
Blockchain technology has a lot of use-cases around the industries. As mentioned above, Blockchain is not only about Bitcoin or cryptocurrencies; it’s about record-keeping with transparency & immutability. Following are few use-cases we will discuss within this section:
• Blockchain in Education
• Blockchain in Healthcare
• Blockchain in Government
• Blockchain in Charity
• Blockchain in Supply Chain
• Blockchain in Identity Management
• Blockchain in Finance
Where ever you need to keep the records or for transparency reasons, you will need the Blockchain Technology to be implemented.
I hope, through this article, you were able to understand the ins and outs of the Blockchain Technology, and how it will change our world.
