Concept of Blockchain Technology
This article was published as a part of the Data Science Blogathon.
Understanding Blockchain Technology
Blockchain is one of the most advanced technologies today. It is a system that records information customized to block any kind of fishing activity from the outside. Initially, it refers to a digital ledger of transactions exposed for distribution through an entire network of computer systems on blockchain technology.
Where can we use Blockchain technology?
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- It will streamline the supply chain and reduce costs for retailers
- It offers easier compliance
- It will improve and speed up the process of downloading food.
Blockchain is a digital distributed ledger that is a form of a database. Its main characteristic is that it is immutable; therefore, the information entered in the ledger cannot be deleted, modified, or altered. Blockchain technology has the power to wipe out any third-party intermediary that works for the real estate industry.
The first application used blockchain to tokenize ownership interests in real estate. Digital tokens that prove an investor’s ownership of an entity have been offered to investors in real estate funds and joint ventures to finance commercial real estate projects (tokenization). With the tokenization of equity, any entity’s ownership share registered within the capital stack of any real estate project can be replaced by a blockchain-based ledger system.
- Increase material supply chain traceability to ensure compliance with corporate standards
- Lower losses from counterfeit/grey market trading
- Improve visibility and compliance with outsourced contract manufacturing
- Reduce paperwork and administrative costs
- Strengthen the company’s reputation by providing transparency about the materials used in products
- Enhance the credibility and public belief in shared data
- Reduce the potential risk to public relations due to improper practices in the supply chain
- Engage stakeholders
Difference Between a Blockchain Ledger and a Database
Understanding the Key Terminologies of Data Science
How secure is blockchain?
What is a Block?
Blockchain is a shared digital ledger. A block in Blockchain records a transaction or transactions to organize, track and review information for informed decision-making.
Each time a new transaction appears on the blockchain, a record of that transaction is developed as a new block to the chain. A new block is added to each participant’s node ledger only after using a consensus algorithm such as proof of work to validate a transaction. A block in a chain is immutable. It can never be updated and can only be appended to a string.
The exclusively first block added to the blockchain is the Genesis block.
What information is stored in a block?
The block consists of a
- Block header containing metadata a
- A transaction is stored in a block using a Merkle Tree.
A block header in a blockchain consists of the attributes which are as follows:
1. A version number for tracking software or a protocol that will allow other computers to read the block correctly.
2. Timestamp: when the transaction was recorded, or the block was created and is expressed in seconds since 1970-01-01T00:00 UTC.
3. A 256-bit cryptographic hash of the previous block header connects one block to the next block in the blockchain. This ensures the integrity of the previous block up to the first block, referred to as the Genesis block.
4. A nonce means a number used only once. A nonce is a randomly generated number that miners generate to solve a complex mathematical problem to create a block.
5. The goal represents the difficulty of generating a nonce that validates a transaction before it is added to the blockchain. It regulates the rate at which new blocks are added to the blockchain and is modified roughly every block in 2016. A higher difficulty in generating a nonce represents a lower target value.
6. Merkle root hash for all transactions in the block.
Transactions or transactions are stored in a block using a Merkle hash tree.
A block hash is a separate hash derived from the data in the block header using SHA-256.
A block hash uses a nonce, so the hash is tied to the nonce forever. The nonce is used to create a secure hash that meets the criteria according to the target. The hash must start with many zeros according to the target.
How is a transaction recorded in the blockchain?
Types of Blockchain Technology
- Public blockchains are unlimited, transparent, permissionless, and fully distributed ledgers.
- No individual or entity controls the blockchain and the transactions that are recorded on the blockchain.
- Anyone can view transactions on the public blockchain.
- Transactions are adds on to the blockchain with the help of a consensus algorithm.
- Examples of public blockchains: are Bitcoin, Ethereum, or Litecoin.
- A private blockchain is centralized and restrictive, and users require permission to connect.
- Work in a closed network.
- Controlled by companies to record their sensitive business data so that it is not visible outside the organization.
- Transactions are private and only available to authorized users on a closed network.
- Private blockchain examples: hyper ledger
- A hybrid blockchain consists of a private and a public blockchain.
- It combines the permissioned feature of a private blockchain with a public blockchain’s security and transparency feature.
- Access control decides which users can view data on the blockchain or add data to the blockchain.
- Suitable for businesses that give them the flexibility they need to operate securely and transparently
Benefits and Importance of Blockchain Technology
BlockChain Technology incorporates several highly advanced technologies to ensure your money’s complete safety and security. With improved features, BlockChain is irresistibly diverse.
The transparency in the transaction makes blockchain one of the most trusted software. There are different types of blockchains. Public blockchain offers transparency due to its features. This technology operates in various aspects of our society, including elections.
Its immutability opens up several opportunities for platforms that require immutable properties to make their system more advanced and functional to compete in the market. For example, you can take chain stock. Immutability allows the company to ensure that no obstacle will continue to exist during transit.
This technology offers digital freedom. You can be pleased with centralized entities that offer connectivity related to the economy. You can take your bank, for example. The bank can block all transactions or freeze the account if it sees fit. However, when you consider blockchain, you can see that there is no centralized authority.
Easy to use
For a knowledgeable person, using blockchain technology is not difficult. Blockchain is not limited to one specific use case. For its ease of use, it can be used in every sector, such as banking, trade finance, government, healthcare, petroleum, education, etc.
This technology uses cryptography to add another layer of security to information storage networks. Blockchain provides better security than other networks. It uses complex mathematical algorithms to ensure maximum security.
Lastly, improving efficiency is one of the most important reasons blockchain is so important. Better security, intermediate removal procedures, and improved technology make it one of the most trusted means. Transactions only take seconds to complete, not a week or two. International transactions have also become easier.
Blockchain Technology is a safe, immutable, peer-to-peer distributed ledger that is decentralized. It consists of a secure block linked in a chain and replicated across multiple nodes connected in a blockchain network. Public, private, and hybrid blockchains can be used based on the useful features of blockchain technology.
- A blockchain is a type of shared database that differs from a typical database in the way it stores information; blockchains store data in blocks that are then linked using cryptography.
- As new data comes, it is directly entered into a new block. Once a block is filled with data, it is chained to the previous block, chaining the data together in chronological order.
- Various types of information can be stored on the blockchain, but the most common use so far has been as a ledger for transactions.
- In the case of Bitcoin, the blockchain is decentralized so that no single person or group has control – rather, control is maintained by all users together.
- Decentralized blockchains are immutable, meaning that entered data is irreversible. For Bitcoin, transactions are permanently recorded and can be seen by anyone.
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