Recently, blockchain technology has changed the world and also changed industries like finance, healthcare, and more. But what does blockchain mean? How does it work? Can this post be helpful to you? There are many questions in your mind. We’ll explain all your questions one by one.
What is Blockchain Technology?
Blockchain is like a digital safe that is shared with a group of many people. Whenever new information is added to it, it gets locked in a kind of block that is also linked with the previous one that forms a chain, It is secure as no one can change its previous entries which makes it more trustworthy.
How Does Blockchain Work?
Digital payments and online tracking are powerful technologies that blockchain uses to record these activities. Let’s go through it slowly to make it easy:
1. Transaction Start
A blockchain transaction starts when there is some change like sending or receiving money. Blockchain records this action which makes it safe and visible to everyone.
2. Block Creation
Whenever the transaction happens at the same time, it groups them together into some kind of blocks like digital pages in a notebook that record every single line. When a block becomes full, a new one is added, which is safe as well as it organizes all the actions that happen.
3. Verification and Consensus
To check blocks before it is added to the blockchain it uses two-step verification Proof of work(PoW) and Proof of stake(PoS). To secure it from fraud.
4. Block Addition to the Chain
As soon as the block is confirmed, it becomes part of the blockchain, where each new block is linked to the previous one, which generates a long un changeable chain of records.
5. Security and Encryption
The security of blockchain keeps it safe from hackers. Each block has a unique code called a hash, which acts like a digital fingerprint. If someone tries to change even the smallest part of the block, the hash will change, showing that the data has been changed.
6. Finalization and Record Update
When the block is added and it is final and can’t be changed, Then everyone who is in the network will get the updated blockchain to make sure all copies are the same.
For a detailed explanation of blockchain mechanics, visit Blockchain Council.
Real-World Examples of Blockchain in Action:
1. Cryptocurrency and Finance (Bitcoin & Ethereum)
Since it is the application of blockchain that means bitcoin is a form where people can send money to someone without ever using the bank, data is being recorded on it which will make it never be fake or anyone can change it. This is one of the best applications of the blockchain. Learn more about Bitcoin on Bitcoin.org.
2. Supply Chain Management
Blockchain helps some of the big companies like Walmart, It helps Walmart to track the product in a very safe way. Blockchain records every step the food takes from the farm to the store. That means that the owner can check where the food came from whether it is safe to eat, and how long is the food kept there.
3. Healthcare Data Management
Now we all know that blockchain helps us record all the activity, and it is of great use for the health sector. MedRec helps doctors and hospitals to share data which means fewer mistakes and the recording of data is secured. Learn more about the blockchain in healthcare at HealthIT.gov.
4. Voting Systems
In the case of the election, the result needs to be kept secure so that no one can change it, we can use blockchain in this case as well which is trustworthy and accurate, which makes the process better for everyone.
5. Real Estate Transactions
Propy is a platform that helps keep the record of property ownership and contracts which saves a lot of time and money.
Advantages of Blockchain
1. Decentralization
Many people in the network can check and confirm the payments done by an individual or a group which means blockchain does need a main boss, this will make the payment difficult to cheat or to control the system. This also keeps everything fair and visible to everyone, So no single person can have all the power to themself.
2. Security
As you know, every block in the blockchain has a unique code called “Hash” Because of this no one can cheat the system or hack it. Hence it becomes one of the most secure platforms. This also prevents cheating or unauthorized changes…
3. Transparency
Since all the payments in the blockchain are open to everyone to see. As everything is visible no one will be able to cheat the system or this will be less likely to happen.
4. Efficiency
Blockchain removes intermediaries, which accelerates transaction processes and reduces costs. Direct person to person and it make effective make more effortless.
As we know middleman in a business will take some amount of money for themself and them they deliver the goods, But this system helps to remove this middle man which not only makes the payment faster but also easier. As the payment is recorded no one can change it, which keeps it safe and trustworthy. This also prevents in cheat in the system and it also makes sure that the information is right or not.
Challenges and Limitations
Blockchain technology has transformed numerous industries, giving way to decentralized, transparent, and secure transaction methods. However, the technology still poses several challenges in its widespread implementation. Let us look at the issues in further detail, and use real-life examples to clarify their implications better.
“Where there is a boon there is a bane” is an awesome line that is also true for this as well, Blockchain is good as it keeps data visible to everyone and keeps it recorded so that no one changes it, But still there is some real-life issue with this as well:
1. Scalability Concerns
Since the use of the blockchain has increased, this causes one big problem for the payments to take longer time.
In 2017 when Bitcoin boomed, a lot of people faced the same problem of delay in the payments which used to take a couple of minutes taking like an hour or so.
2. High Energy Consumption
Since blockchain works on the principle of mining, more the minors are more will be the energy consumption to the system secure. Since there is a lot of energy it is taking this will become bad for our environment.
To fix this issue some blockchain networks are using the “Proof of Work” (PoW) and “Proof of Stake” (PoS), Which consumes less energy but does the same amount of job the rest of the function are doing.
Summary: Blockchain Technology
Blockchain is the most secure system where blocks contain some information which can not be changed once the action is taken. It works by recording the actions and then it verifies them using methods like “Proof of Work” (PoW) and the “Proof of State” (PoS).
Blockchain is used in different areas like Bitcoin, tracking products, healthcare, voting, and real estate.
It has some advantages as well as disadvantages as well:
- Advantages:
- No Central Authority
- Security
- Visibility
- Fast
- Dis-Advantages:
- Slow Payments
- Uses High Energy
For more in-depth insights into blockchain’s impact across various industries, visit Acropolium’s blog and IDC Blog.
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