There is no doubt that Bitcoin catapulted Blockchain technology into the limelight and certainly contributed to its success. But Blockchain technology is far more vast than that. The vision of the technology is to transform the digital activities of business esp. Transaction and data share without categorization of the industry. And yet the benefits of this technology are far-reached.
In this article, we’re going to deeply explore the mechanism and fundamentals of Blockchain technology. So, without any delay let’s get started.
What is Blockchain?
Blockchain technology is a distributed, unchangeable ledger, that provides the operation of recording transactions and tracing assets in a business network. Blockchain is the database that accumulates and stores the data and information in a very well and organized digital format. Blockchain is an independent innovation that guarantees fidelity and security without involvement or dependence on a third-party application.
Importance of Blockchain Technology
The main hook that determines the effective operation of the business is the data and information. If the transfer and storage of information get delayed, there is a high chance of a data breach. In case the transactional methodology is poor then there is a high chance of data leaks chances and related problems. In contrast, the main purpose of Blockchain is to provide security as much as to make it impossible for middleman attacks and other potential security attacks.
How Does a Blockchain Work?
Before getting to How Does a Blockchain Work we should have to know the fundamentals of Blockchain technology. Another strong point that assures the security under blockchain is that each of the blocks contains four details that are interconnected to each other as mentioned below:
- Hash of Previous Block
- Transaction data
Hash is the random combination of numbers and letters which are assigned to a new transaction. The transaction data is the information of the transaction for example trader name, supplier name, address, contact details, etc. Nonce aka “Number Only Used Once” is the 32-bit pseudo-random code that can be only once used. The Subject code is countered for minors to hash the value of the block.
The primary motive of Blockchain is to transform physical and third-party transactions into independent transactions by creating a common platform value i.e. cryptocurrency. Blockchains work on Distributed Ledger Technology (DLT), in which immutable ledgers can’t be modified in any form like delete, alter, or destroyed.
After entering a new transaction in Blockchain, the information is communicated through the peer-to-peer communication channel on different computers across the world. Next, the equation is solved to confirm the validity of the transaction, and then the same transaction is clustered in a blockchain box. The chained blocks then create a permanent transaction history. Finally, the transaction will be complete.
Is Blockchain Secure?
As we mentioned earlier, Blockchain technology is too much concerned with the security aspect. The chance of getting your data and information lost is something like next to impossible. Blockchain technology works on the decentralization mechanism (A mechanism that doesn’t have any central controlling authority).
Authorized Individual nodes (computers) are allowed to verify the new nodes. In the account of data transfer and information sharing, the Public and Private keys are being used. This means no information that will be public while doing the transfer of data and information. If you are communicating with other nodes, you only provide them with a Public Key, whereas your information is located under the Private Keys.
Difference Between Bitcoin and Blockchain
With the evolution of Bitcoin, people have started to think that blockchain and bitcoin is the same stuff but deep down there is some significant difference between both of them as below:
Blockchain vs Bitcoin
- Bitcoin is a cryptocurrency and Blockchain is the decentralized database that is used to do transactions of Bitcoin.
- The mining or transaction is done anonymously whereas Blockchain works transparently. Here, transparency is not indicating the issue of privacy protection.
- Bitcoin is all about the transaction of the currency by following the protocol defined by Blockchain but Blockchain Technology transfers all sorts of data and information including property ownership.
- The main aim of Bitcoin is to simplify the transaction method and remove the restriction of government whereas Blockchain aims to create an environment in a peer-to-peer communication channel with a reduction of cost, providing security as much as making impossible data breaches.
- The scope has less scope than Blockchain.
Benefits of Blockchain Technology
There are various importance of blockchain technology among them some key benefits of blockchain are mentioned below:
The absence of a central controlling authority creates trust when participants lack trust because they’re unknown to each other. Blockchain enables sharing of data within an ecosystem of businesses where no single entity is exclusively in charge.
Blockchain operates in such an ecosystem in which there is no involvement of middlemen like third-party providers, and vendors. Likewise, Blockchain can cut the cost for the organization by eliminating manual tasks like aggregating, and amending data, as well as reporting and auditing processes. As far as the cost is concerned, a significant reduction can be seen in this technology.
Blockchain Technology has replaced the manual process of transactions by the elimination of intermediaries. Blockchain can even handle the transaction in less than a second depending upon the size of each block of data and the network traffic. Some experts in the field of Blockchain conclude that “Blockchain Technology beats other processes and technologies in the account of speed”.
Immutability simply means the non-editable transaction once recorded in Blockchain Technology. It can’t be edited in any form like delete, alter, or any other changes. This ecosystem makes the transaction more secure and creates transparency. In contrast, once entered a transaction is the permanent record within Blockchain.
Tokenization is the approach of converting the value of the physical or digital properties into a digital token then recorded on and then shared via blockchain. But be clear that Tokenization doesn’t work in the mechanism of Non-Fungible Tokens (NTFS), whereas it works in the mechanism of “shares”. The token in the Blockchain are fungible and can be tied to the value of the assets.
So, if you’re a Tech enthusiast and have yet to consider the power of blockchain, you might want to enrol in the course in Nepal. Here is good news for you, Softwarica College of IT and Ecommerce is going to launch the Blockchain Technology course shortly. Keep in touch to get our latest update.