What is Blockchain?
A blockchain is a distributed database that is shared between nodes of a computer network. As a database, a blockchain stores information electronically in a digital format. Blockchains are known for their vital role in cryptocurrency systems such as bitcoin, to maintain a secure and decentralized record of transactions. The innovation of a blockchain is that it guarantees the fidelity and security of records of data and generates trust without the need for a trusted third party.
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A key difference between a typical database and a blockchain is how the data is structured. A blockchain collects information together in groups, known as blocks, that contain sets of information. Blocks have some storage capacity and, when filled, are closed and linked to the previously filled block, forming a chain of data called a blockchain. All the new information that comes after that newly added block is compiled into a newly created block which once filled will also be added to the chain.
A database typically structures its data in tables, whereas a blockchain, as its name implies, structures its data in chunks (blocks) that are tied together. This data structure inherently creates an immutable timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain.
As blockchain continues to grow and become more user-friendly, the onus is on you to learn this evolving technology to prepare for the future. If you are new to blockchain, this is the perfect platform to gain the solid foundational knowledge. In this article, you will learn how to answer the question, “What is blockchain technology?” You will also learn how blockchain works, why it is important, and how you can use this field to advance your career.
History of blockchain
Satoshi Nakamoto, whose true identity still remains unknown, first introduced the concept of blockchain in 2008. The design continued to be improved and developed, with Nakamoto using a hashcash-like method. It eventually became a primary component of bitcoin, a popular form of cryptocurrency, where it acts as a public ledger for all network transactions. The bitcoin blockchain file size, which includes all transactions and records on the network, continued to increase significantly. By August 2014, it had reached 20 gigabytes, and eventually exceeded 200 gigabytes by early 2020.
Why is Blockchain Important?
Business runs on information. The faster this is achieved and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides instant, shared and completely transparent information stored on an immutable ledger that can only be accessed by permitted network members. A blockchain network can track orders, payments, accounts, production, and much more. And since members share the same view of the truth, you can see all the details of the transaction end to end, giving you more confidence, as well as new capabilities and opportunities.
The benefits of blockchain
Operations often waste effort on duplicate record keeping and third-party verification. Recordkeeping systems can be vulnerable to fraud and cyberattacks. Limited transparency can slow down data validation. And with the advent of IoT, transaction volume has exploded. All of this slows business down erodes the bottom line – and means we need a better way. Enter the blockchain.
As a member of a members-only network with Blockchain, you can rest assured that you are receiving accurate and timely data and that your confidential Blockchain records will only be shared with network members whom you specifically designated. Access is granted from.
Consent on data accuracy is required from all network members, and all valid transactions are irreversible as they are recorded permanently. No one, not even a system administrator, can delete a transaction.
With a distributed ledger that is shared among members of a network, time-wasting record reconciliation is eliminated. And to speed up transactions, a set of rules – called smart contracts – can be stored on the blockchain and executed automatically.
Types of blockchain networks
Public blockchain network
A public blockchain is one that anyone can join and participate in, such as bitcoin. Drawbacks can include the need for substantial computational power, little or no privacy for transactions, and weak security. These are important considerations for enterprise use cases of blockchain.
Banking & Finance
Perhaps no industry will benefit more from integrating blockchain into its business operations than banking. Financial institutions operate only during business hours, usually five days a week. This means that if you try to deposit a check at 6 PM on a Friday, you will have to wait until Monday morning to see that the money has been credited to your account. Even if you make your deposit during business hours, it can still take one to three days to verify a transaction, because of the huge volume of transactions that banks need to settle. Blockchain, on the other hand, never sleeps.
Who invented Blockchain?
Blockchain technology was first outlined in 1991 by Stuart Haber and W Scott Stornetta, two mathematicians who wanted to implement a system where document timestamps could not be tampered with. 1 In the late 1990s, cyberpunk Nick Szabo proposed using a blockchain to secure a digital payment system, known as Bit Gold (which was never implemented)