Have you ever thought of where the technology sector is heading? Have you ever desired to get a platform where you could do business transactions within minutes?
Various groups of people have tried to come up with relevant applications to solve those problems. Blockchain is one of the successful platforms that perform such functions.
What is blockchain technology and how does it work?
Blockchain is a kind of technology used to store data transactions in encrypted forms that nobody else can crack or penetrate through. It could be termed as a ledger system used to store data transactions.
Cryptography has been used in the building of blockchain to help secure transactions. Once an entry is verified, it gets a spot in the ledger and it cannot be modified or even deleted by the user.
In simpler terms, blockchain works in the following steps:
- A user in a network requests a transaction that could be involving records, contracts, or cryptocurrency.
- The transaction that is requested is then broadcasted to a peer-to-peer network through the available nodes.
- The transaction is then verified by the network of nodes and the user’s status with the help of algorithms.
- After completion of the whole transacting process, the entry is then recorded to the blockchain ledger.
Can blockchain be hacked?
Blockchain is decentralized providing the system with a better line of defense thus secure to use. Truly there is no completely hack-proof digital platform or application in the world.
The only thing that would help is using advanced security features when building applications to enhance confidentiality. A blockchain system can be penetrated illegally by having access to multiple nodes of a network. The system is then trucked by the false identities brought up.
Who invented blockchain?
Blockchain was launched about ten years ago by a group that preferred to call themselves Satoshi Nakamoto. The main objective of creating blockchain was to make it serve as a public transaction ledger of the cryptocurrency bitcoin.
With the use of blockchain, data transactions are well encrypted and an outsider cannot tamper with them. Blockchain was also meant to aid in speeding up the data transfer process.
Why do we use blockchain?
Business people could use blockchain to eliminate middlemen within. Middlemen increase the cost of distributing a company’s products. They may also have low-quality after-sale services which may lead to customer loss.
Blockchain is advantageous since written transactions cannot be changed or deleted. It, therefore, shows all the transactions that are done and enhances transparency. There are also no illegal transactions done in blockchain since they all have to be verified to be stored in the database.
There are three available versions of blockchain which are:
Blockchain 1.0 – this is mainly for financial transactions
Blockchain 2.0 – they are used to make contracts between businesses and investors digitally
Blockchain 3.0 – it has the backend code functioning on a decentralized P2P network
Where is blockchain used?
Blockchain is not limited to money transfer or cryptocurrency. There are various places blockchain could be used.
Some of the known applications of blockchain include:
- Voting purposes
- Money laundering tracking
- Real estate processing and land transfers
- Tracking assets
- Insight for advertising
- Tracking content creators’ payments
- Tracking products in complex supply chains
- Regulating taxes
What are the disadvantages of blockchain technology?
Every individual has his or her preference when it comes to using things. As a user, you should keep in mind that the data transactions will be stored after verification but not permanently. The transactions will be erased from the system after some time. Some of the disadvantages of blockchain are:
1. Lack of scalability
The systems tend to fail when the workload increases repeatedly. The performance decreases in response to the workload at a given period.
Lagging may occur when there are too many users in the network trying to transact at the time. This overworks the system making it slow.
When planning to implement a blockchain platform, a high amount of capital is required to make it possible. The maintenance cost is high too.
It is the users’ responsibility to maintain and update their systems. The exercise is quite difficult for newbies.
5. Immutable data
Data being immutable means that the information in the database cannot be updated or deleted. In this case, once the data transaction has been completed and stored, you cannot make any changes.
What are the benefits of blockchain technology?
Each platform has its benefits that are meant to guide investors as well as users. Some of these benefits include:
1. Enhances traceability
Blockchain is used for product traceability. You could be having a complex supply system that could lose track of some goods. This is where blockchain could be of good use. The data verifies the authenticity of assets as well as prevents fraud.
2. Reduced cost of business operation
With the application of blockchain in your business, be sure to have third-party interference eliminated. Third-party include middlemen and the government trying to change the value of the currency. This, therefore, reduces the cost incurred during marketing and trading.
3. Enhanced security
Every transaction done on this platform is encrypted and must be linked to the previous transactions. The application of cryptography in blockchain helps secure transactions.
4. Fast transactions
The virtual transactions done are fast and efficient. The transactions are complete within a few minutes.
Transparency is where anyone who joins the network can view all the information regarding the network. Assigning unique public addresses to the users in the network makes it possible.
6. Data immutability
The data being immutable is also a security measure. The nature of data being incapable of change is achieved by using a complicated string of mathematical figures.
In conclusion, blockchain is defined to be a system used to record information, calculations, entries, and transactions as immutable data. The blockchain variants are a consortium, private and public. If you want to work with systems that are up to date in the business world, blockchain is a great choice.