What is Blockchain?

Blockchain is a system of recording information that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is a digital ledger of transactions duplicated and distributed across the entire network of computer systems on the Blockchain.

Founder of Blockchain

A blockchain was created by a person (or group of people) using the name (or pseudonym) Satoshi Nakamoto in 2008 to serve as the public distributed ledger.

 

How does it work?

A blockchain is a digital ledger or database where encrypted blocks of digital asset data are stored and chained together, forming a single chronological source of truth for the data. Digital assets are distributed, not copied or transferred.

The goal of Blockchain is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is a foundation for immutable ledgers or records of transactions that cannot be altered, deleted, or destroyed. Blockchains are also known as distributed ledger technology (DLT)

First proposed as a research project in 1991, the blockchain concept predated its first widespread application in use: Bitcoin, in 2009. In the years since, the use of blockchains has exploded via the creation of various cryptocurrencies, decentralized finance (DeFi) applications, non-Fungible tokens (NFTs) and smart contracts

This technology allows participants to confirm transactions without needing a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and other issues.

 

What advantages of Blockchain Technology?

1.  Open: 
   One of the significant advantages of blockchain technology is that it is accessible to all means. Anyone can become a participant in the contribution to blockchain technology, and one does not require any permission from anybody to join the distributed network.
2.  Verifiable: 
   Blockchain technology is used to store information in a decentralized manner so everyone can verify the correctness of the information by using zero-knowledge proof, through which one party proves the correctness of data to another party without revealing anything about the data.
3.  Permanent: 
   Records or information stored using blockchain technology is permanent means one needs not worry about losing the data because duplicate copies are stored at each local node as it is a decentralized network with a number of trustworthy nodes.
4.  Free from Censorship:
   Blockchain technology is considered free from censorship as it does not have control of any single party; instead, it has the concept of trustworthy nodes for validation and consensus protocols that approve transactions by using smart contracts.
5.  Tighter Security:
   Blockchain uses hashing techniques to store each transaction on a connected block, so it has tighter security. It uses SHA 256 hashing technique for storing transactions.
6.  Immutability:
   Blockchain technology cannot tamper with data due to its decentralized structure. Any change will be reflected in all the nodes, so one cannot commit fraud here. Hence it can be claimed that transactions are tamper-proof.
7.  Transparency
   : It makes transaction histories transparent everywhere. All the nodes in the network have a copy of the transaction. If any changes occur in the transaction, it is visible to the other nodes.
8.  Efficiency
   : Blockchain removes any third-party intervention between transactions and removes the mistake making the system efficient and faster. Settlement is made more accessible and smooth.
9.  Cost Reduction
   : As Blockchain needs no third man, it reduces the business’s cost and gives trust to the other partner.

 

Disadvantages

 

1.  Scalability:
   One of the most significant drawbacks of blockchain technology is that it cannot scale due to the fixed size of the block for storing information. The block size is 1 MB, which can hold only a few transactions on a single block.
2.  Immaturity: 
   Blockchain is only a couple-year-old technology, so people do not have much confidence in it. They are not ready to invest in it, yet several applications of Blockchain are doing great in different industries. However, it still needs to win even more people’s confidence to be recognized for its complete utilization.
3.  Energy Consuming: 
   A lot of energy is used to verify any transaction, so it becomes a problem. According to the survey, it is considered that 0.3 per cent of the world’s electricity had been used by 2018 in verifying transactions using blockchain technology.
4.  Time-Consuming: 
   To add the following block in the chain, miners need to compute nonce values many times, so this is a time-consuming process and needs to be sped up to be used for industrial purposes.
5.  Legal Formalities: 
   In some countries, the use of blockchain technology applications is banned, like cryptocurrency, due to some environmental issues. They are not promoting to use of blockchain technology in the commercial sector.
6.  Storage
   : Blockchain databases are stored on all the network nodes, creating an issue with the storage; increasing the number of transactions will require more storage.
7.  Regulations
   : Blockchain faces challenges with some financial institutions. Other technology aspects will be required to adopt Blockchain in the broader aspect.

Blockchain security

Blockchain security is a complete risk management system for blockchain networks, incorporating assurance services, cybersecurity frameworks, and best practices to mitigate the risks of fraud and cyber-attacks.

When Blockchain is invented

Blockchain—a peer-to-peer network that sits on top of the internet—was introduced in October 2008 as part of a proposal for bitcoin, a virtual currency system that eschewed a central authority for issuing currency, transferring ownership, and confirming transactions.

 

Features of Blockchain

• Increased Capacity: It is the first and essential feature of Blockchain.
• Better Security.
• Immutability.
• Faster Settlement.
• Decentralized System.
• Consensus.
• Distributed Ledger.
• It cannot be corrupted.

Founder of Blockchain

A blockchain was created by a person (or group of people) using the name (or pseudonym) Satoshi Nakamoto in 2008 to serve as the public distributed ledger.

If Blockchain is stopped, what will we happen?

The bitcoin blockchain will stop synchronizing in the event of an internet shutdown. The ledgers will immediately stop recording bitcoin transactions, temporarily breaking transaction processing. The network will resume if the transactions are consistent.

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