What is a Blockchain? Definition, Working & Future of Blockchain Technology

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In this article we will discuss in detail what is a blockchain in simple words, how does it work, what is the future of blockchain and how to invest in blockchain etc.

You must be aware of Bitcoin, the technology behind which is called Blockchain. Many Cryptocurrencies of the world work on the basis of this technology. This is sometimes called Distributed Ledger Technology (DLT), which makes any digitally mandated data immutable and transparent.

Blockchain is normally considered to be a chain of blocks, thereby solving the problem of double records without the need for a central server. Here you can store any of your important documents online, but changing this is extremely difficult.

Special highlight point:

  • Blockchain is a type of chain of blocks, similar to a database.
  • Here, the data is stored in blocks and chained together.
  • The new data is stored in the new block, and it is linked to the previous blockchain.
  • By far, the most common use in blockchain has been as a ledger for transactions.
  • In the case of Bitcoin, the blockchain is decentralized, allowing all users to collectively exercise control.
  • All data stored in the blockchain is immutable, although this data can be viewed by anyone.

What is a Blockchain – Storage Structure, Decentralization, Transparency

Blockchain is a series of multiple blocks in which digital documents are stored, and its purpose is to timestamp the data so that it is not possible to backdate or temper them.

This system is a software protocol that has many parts, such as a database, software application and some computers chain etc. Apart from this, internet is also needed so that the data can be uploaded on the blockchain.

Blockchain is the technology behind many cryptocurrencies like bitcoin, blockchain creates ledgers to track who owns digital tokens (cryptocurrencies). Each new block in the blockchain is added to the last part of the previous chain.

Here another word “SHA256 Hash” appears, which is a unique code similar to a fingerprint. And it identifies the code block. It is impossible to change these hashes of blocks, and if someone changes these blocks, the entire blockchain will be invalidated.

Each block has the following-

  • Statistics
  • Hash
  • Hash of the previous block

Storage structure in blockchain and specific database

These two databases have different storage structures. A blockchain consists of blocks, and data is stored in each block. When a block is full, it is added to a previous chain at the last position, and then the new block is added to the chain by storing the data.

In typical databases, data is transmitted in the form of tables, whereas in a blockchain the data is linked along a chain in the form of blocks.

Also, it is impossible to change the full block once it is added to the blockchain, but on the other hand the data of a specific database can be changed as needed. Each block in this chain is assigned an exact timestamp.

Blockchain Decentralization

In the case of bitcoin, this chain is used in a decentralized manner, with the entire data of bitcoin transactions being stored. Bitcoin’s network is made up of thousands of computers, although all computers are operated by individual individuals or groups of people.

Blockchain is a database specific to bitcoin, with each of its blocks storing bitcoin transaction data, which is impossible to change. This blockchain is one of the best security systems in the world and is also widely used for large businesses and Security in the US.

If a user tampers with the records associated with this chain, all other blocks will cross-reference to each other, and this allows hackers to be easily identified. Overall, it can be said that this security system helps in establishing an accurate and transparent sequence of data.

Its data can be changed, but voting takes place and the decision is in the best interest of the majority. The system can also be used for legal contracts, state identification, confidential information or company product catalogs, etc.

Its transparency

The decentralized nature of the blockchain allows all transactions to be transparently viewed using individual nodes (computers) or explorers. New blocks added to this chain (transactional data) can be viewed live, meaning you can track bitcoin transactions anywhere.

Due to this transparency quality, if a hacker steals some bitcoin, and takes it somewhere or spends it, then it will be known.

What is Blockchain for Security Purposes?

This system is used in many ways for security and trust issues. New blocks are always stored linearly and chronologically, and these blocks are added at the end of the chain, but after adding a block, the block content cannot be changed by going back.

Because each block has its own hash, which is a mathematics function, editing the block in any way will also change the hash code. Hence, it is considered to be an extremely important system for security.

Each block of the chain cross-references against each other, so that any hacker would have to control 51% of the copies for the hack to succeed. And this requires a lot of money and resources.

Currently, this network is growing very fast, and hacking them will not only be extremely costly, but it will also be useless. Thus, Blockchain is a very important system for security purposes.

How do blockchain work and its importance?

As I told you that blockchain is made up of many blocks, and all the blocks cross-reference to each other. It is mainly used for cryptocurrencies so that all transactions can be secure.

This chain works with multiple blocks, and each block contains statistics, hash and the hash of the previous block. Its working is something like this-

For example, there is a blockchain, which has three blocks. Block 1 has no previous hash, but it has a hash of its own. This hash will be the previous hash of block 2, and block 2 will also have a hash of its own. The hash of block 2 will be the previous hash of block 3.

In this way, all the blocks are connected to each other by the previous hash. Now we will see how its security system works-

Suppose a hacker changed the hash of block 2. Changing the hash of Block 2 causes the previous hash of Block 3 to not match, and thus traps the hacker. Changing any one hash of the chain will quickly invalidate all the other hashes.

Any hacker would have to hack 51% of Jain’s block to hack the blockchain, which is impossible as there are so many people currently using bitcoin. Also, it requires a lot of money and resources, so it is a safe system.

The concept of “Proof of work” is also used in this security system to protect the system from high-powered computers.

Distributed P2P Network

This is also another way of blockchain, which can make the chain more secure. This approach uses a peer-to-peer network, and all users are allowed to join. After that, when someone enters the network, he/she gets a complete copy of the blockchain.

In this system, each new blog reaches all the users, and this block is verified and added to the blockchain by a computer (node). All users in this chain give consent to any new block after that block is uploaded.

Why Blockchain is Necessary?

The financial industry plays an important role in the quick settlement of trades in the sector.

Here, all the transactions are registered in chronological order, and that transaction is kept unchanged.

This security system is absolutely reliable.

This can prevent fraud.

All business data can be kept secure.

Here you can do direct transactions with each other without any third party.

Decentralized technology can be used in the case of cryptocurrencies.

The future of blockchain

You and we know that blockchain is one of the most talked-about technologies at present, which is capable of driving big changes and creating new opportunities in industries.

The most famous example of a blockchain is bitcoin, which initially cost less than $1, but today it is worth more than $10,000.

Overall, it can be said that the number of people using this technology in the United States is increasing. Blockchain users include Google, Goldman Sachs, Visa, Bitcoin, cryptocurrency and Deloitte etc.

Looking at its future, it is an emerging technology, whose predictions are still mixed. Some believe that it should not be used, and some believe that this technology will positively affect their industry.

United States analyst firm Gartner recently presented a Trend Insight report, in which forecasts related to blockchain have been made, such as-

  • In the coming 2022, only 10% of enterprises will achieve any radical transformation using it, and at least one innovative business built on this technology will have $10 billion.
  • In addition, by 2026, the value of the business associated with this system will exceed $360 billion.
  • After this, this value will increase to more than $3.1 trillion by 2030.

Cybersecurity Blockchain Technology pointed out that the biggest challenge for businesses of all sizes in the future is tampering with data, and blockchain is capable of preventing this tampering.

John Zanni, President of the Acronis Foundation, has said that this technology is influential in the technology sector and the IT sector. Its fingerprint (hash) system appears to be secure, on which the future can be kept secure.

How to invest in blockchain?

Investing in Blockchain means buying currency or shares from Blockchain companies, such as-

  • You can buy cryptocurrencies directly, such as Bitcoin and Coinbase (COIN – Legal US currency), and shares from a number of cryptocurrency trusts such as the Grayscale Bitcoin Trust or CNBC.
  • We can also buy exchange-traded funds (ETFs), e.g. Amplify Transformational Data Sharing ETF and Reality Shares Nasdaq NextGen Economy ETF.
  • One can invest in the new cryptocurrency of a new blockchain project.

There are few companies based on blockchain that you can invest in, and these public companies are the following:-

Digital payments giants-

PayPal Holdings,

Square,

Visa,

MasterCard,

CME Group etc.

On the digital asset front-

Facebook etc.

On the technology front-

NVIDIA

AMD

Intel

IBM etc.

The three largest public cloud providers-

Amazon

Microsoft

Azure

Alphabet

Google cloud etc.

These are some top investing blockchain companies in the United States.

Article by

Prem Jatol

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