“The blockchain is all about bringing in transparency and efficiency into the existing systems which are running the upstream and downstream supply chains and making them more proactive and predictive.”Rahul Guhathakurta, The Age of Blockchain: A Collection of Articles
What is Blockchain Technology?
Blockchain makes the historical scene of any processed resource unalterable and easy forward decentralization and cryptologic hashing. It is conjointly referred to as Distributed Ledger Technology (DLT).
A simple example for better understanding blockchain technology is a Google Sheet. When we create a sheet and share it with our team, the sheet is distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the sheet at the same time. No one is locked out awaiting changes from another party. While all modifications for sheets are recorded in real time, making changes completely transparent.
Blockchain contains 3 important concepts : blocks, nodes and miners.
Each chain contains of diverse blocks and every block has 3 basic components:
- The information within the block.
- A 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
- The hash could be a 256-bit range wedded to the nonce. It should start with a vast range of zeroes (i.e., be surprisingly little).
When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined.
The most important concept in blockchain technology is decentralization. No computer or organization owns the chain, it is distributed record via the nodes connected to the chain. Nodes can be any kind of electronic device/machine that maintains copies of blockchain & keeps the network functioning.
Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. As blockchains are transparent, every action in the record can be easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their transactions.
Miners create new blocks on the chain through a procedure referred to as mining.
In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in the chain, so mining a block isn’t easy, especially on bigger chains.
Miners use special software to tackle the incredibly complex math problem of finding a nonce that generates an accepted hash. Because the nonce is 32 bits and the hash is 256, there are around less or more than four billion possible nonce-hash combinations that must be mined before the correct one is found.
When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.
What are the three pillars of Blockchain Technology ?
The three important properties of Blockchain Technology which have helped it gain widespread acclaim are as follows:
Pillar #1: Decentralization
Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity that stored all the data and you’d have to interact solely with this entity to get whatever information you required.
The best example of decentralization is Google Docs. where you can store your all documentation at one place. You can access it from any system , make changes in any document & it will be updated in real time.
Pillar #2: Transparency
One of the most exciting concepts in blockchain is “Transparency.”
Let see how it works ? – suppose a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Robin sent 1 BTC” instead you will see “1MF1bhsFLkczzz8vpFYEmvwT2TayCt7NZk sent 1 BTC”.
It means the person’s real identity is secure & you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra trust and much needed, level of accountability.
Pillar #3: Immutability
Immutability can be defined as the ability of a blockchain ledger to remain unchanged, for a blockchain to remain unaltered and indelible. More succinctly, data in the blockchain can not be tampered or altered.
This is a reason why the blockchain gets this property is that of the cryptographic hash function.
In a simple language, hashing implies taking an info of any length and giving out a yield of a fixed length. With regards to hashing implies taking an info string of any length and giving out a yield of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and as hashing algorithms (Bitcoin uses SHA-256) which gives an output of a fixed length.
Block chain technology is the future technology which can make a currency of the world. Just like PayTm, Phone Pe you can use cryptocurrency for payment just because of blockchain technology.
Blockchain Technology can be portrayed as information you can just add to, not detract from or change.