What is blockchain?
Blockchain is a new technology, and till now, it has impacted various industries. It is a secure, decentralized, and transparent distributed ledger.
The following features make the Bitcoin technology to stand out:
- Decentralized – Blockchains are decentralized, which means no person or group holds authority over it. Everybody in the network holds a copy of the distributed ledger, and no one can modify it on his own. This feature makes blockchain technology transparent and secure.
- Peer to Peer Network – Blockchain technology allows the interaction between two parties through peer to peer model without any intervention of any third party. The P2P protocol allows the participants to hold a copy of transactions, ensuring approval from machine consensus. Take, for example, if you want to make any transaction from one place to another, you can do that through blockchain within seconds. Also, you will not be charged with anything extra.
- Immutable – Immutability means that any data that is once written on the blockchain is not going to change. Once the data is entered, it can neither be changed nor altered. So if someone tries to change one Block, he will have to change the entire blockchain. Change in one hash will need changes to all the hashes, which is not possible. So the data stored in the blockchain is unsusceptible to alterations.
- Tamper-proof – Blockchains are tamper-proof as any change in one block can be easily detected. Each hash has a unique function associated with Block; consider it as a fingerprint of the Block. Any change in the data of the Block will change the function of the hash. As the Hash function of one block is associated with the next Block, the hacker will need to change the hashes of all the Blocks, which is quite impossible.
Types of blockchain
Since its inception, Blockchain technology has evolved a lot. There are only two broad categories in which blockchain can be divided:
- Public Blockchain – A public blockchain is a ledger in which no permission is needed; it can be accessed by anyone and everyone. Anyone having an internet connection can download and access it. Anyone can check the history of blockchain and can make transactions through it. Public Blockchain rewards its network participants or the mining and maintaining the immutability of the ledger. Public Blockchain allows communities to exchange information openly. However, there is a disadvantage of this type of blockchain, which is that it can be compromised if the rules surrounding it are not well executed.
- Private Blockchain – Unlike Public Blockchain, private Blockchains are the ones shared only with the trusted participants. The control of the network is in the hands of the owners. The private blockchain’s rules can be altered according to the number of members, different levels of permissions, exposure, authorization, etc.
A private blockchain can either run independently or can be integrated with other blockchains too. A private blockchain is used by enterprises and companies, so the level of trust among the participants is higher in such types of blockchains.
Although Bitcoin was the first application on a blockchain, it is not the only one. Here are some other popular applications on blockchain:
- Smart contracts – For the smooth execution of the business, contracts are signed between two parties. However, these paper-based contracts can have errors and frauds that challenge the trust of both parties. Smart contracts are the best solution as they are digital and self-executable, which means as and when certain conditions are met, these contracts are deployed.
- Identity management – Blockchain offers you advanced public-private encryption using which you can prove your identity along with digitizing your documents. The unique secure identity can be very helpful when conducting any financial transaction on a shared economy.
- IP protection – With the help of blockchain technology, copyrights can be stored in the form of smart contracts allowing automation in the businesses. This can increase online sales and eliminate redistribution risk.
The revolutionary blockchain technology has a huge potential. While some companies and businesses have started adopting blockchain technology, many are still exploring the best way to work with it. Blockchain is the latest and one of the best technologies in the world. Today more areas of the technology are being discovered with each passing day, and it will be no surprise that blockchain technology will revolutionize the future.