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All You Need to Know About Blockchain Technology

Blockchain

First of all, to understand the meaning of blockchains you must first know what the term “decentralized” means. Now, let us examine the meaning of the word, shall we?

The term Decentralized means the dispersion or distribution of function and power, or more appropriately, a system that directs peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary.

Simply put, a blockchain is a system of recording information in such a way that it makes it very difficult if not impossible to change, cheat or hack the system. It is basically a digital ledger or record of transactions duplicated and distributed across the entire network of computer systems on the blockchain.

Each individual block in the chain carries a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralized database is managed by multiple participants known as Distributed Ledger Technology (DLT). Imagine you are living in an estate, every house on your street is a block, all the houses are CCTV based, connected by a single network cake. everybody is privy to what everybody does, if I chose to dance in my house, everybody will know I am dancing. I will not be able to deny that fact, because, they all have access to that information. Fascinating right, I should think so myself!

Blockchain is a type of DLT in which transactions are recorded with an unchangeable cryptographic signature called ‘Hash’. This means if a block in one chain changes, it would immediately be obvious that it had been tampered with. If a hacker wanted to corrupt a blockchain system, they would have to change every block in the chain across all of the distributed versions of the chain.

Blockchain such as Bitcoin and Ethereum are constantly and continuously growing as blocks are being added to the chain, which in turn adds to the security of the ledger.

The blockchain was popularized by a person (or a group of people) that go by the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin, based on the work of Stuart Haber, W. Scott Stornetta and Dave Bayer. Till date, the identity of Satoshi Nakamoto remains unknown. The bitcoin design inspired other applications and blockchains that are readable by the public and are mostly used by cryptocurrencies. The blockchain is considered a payment rail.

Types of Blockchains

Presntly, there are at least four types of blockchain networks I.e. public blockchains, private blockchains, consortium blockchains and hybrid  blockchains.

Public Blockchains

A public blockchain has no access restrictions whatsoever.

Private blockchain

A private blockchain is only accessible with permission from the network administrators. One cannot join it unless invited by the network administrators.

Hybrid blockchains

This type of blockchain has a combination of centralized and decentralized features.

Sidechains

This is the term that is used to refer to a blockchain ledger that ledger that runs in parallel to a primary blockchain entries from the primary blockchain can be linked to and from the primary the side chain.

Uses of Blockchain

The blockchain technology can be incorporated into multiple areas.

Cryptocurrencies

Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin and ethereum network are both based on blockchain.

Smart contract

Blockchain-based smart contracts are proposed contracts that can be partially or fully executed without human interaction (I.e autonomously).

Financial services

Many banks have shown interest in implementing distributed ledgers for use in banking, and fully cooperating with the tech companies creating private blockchains according to Reason, and according to study by IBM in September 2016  , this is happening faster that expected.

Games

Blockchain tecnology, such as cryptocurrencies and non-fungible tokens (NFTs) are being used in video games for monetization. Many live-service games offer in-game customization options like, character skins or other in-game items which can be earned and traded amongst players using the in-game currency.

Domain names

There are various efforts to offer domain name services through the blockchain. These domain names can be controlled by the use of a private key which allows the use of uncensorable websites.

Supply chain

There have been several different efforts to incorporate blockchains in supply chain management. This includes:

  • Precious commodities mining
  •  Food supply

Other uses of blockchain

Blockchain technology can be used to create a ledger system that is transparent, public and permanent for compiling data on sales, tracking digital use, and also payments to content creators.

Blockchain is used in peer-to-peer energy trading.

Blockchain could be used to detect counterfeits by assigning unique identifiers to shpments and documents, products as well as keeping records of transactions that cannot be altered or forged.

In a nutshell, the blockchain is a highly secure system of keeping records as well as making payments that has a myriad of applications.

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