What Is a Blockchain?

The term "blockchain" refers to a digital transaction ledger maintained by a network of computers in a way that makes it difficult to tamper with or modify the data. By eliminating the middleman or other third party, the technology provides a safe way for people to transact with one another.

Cryptography is employed to connect a collection of records known as blocks. Every transaction is independently validated via peer-to-peer computer networks, time-stamped, and added to the ledger; the information that has been recorded can't be changed easily.

Blockchains are well recognized for playing a key role in cryptocurrency systems like Bitcoin in keeping a secured and decentralized history of transactions. In contrast to databases, which typically organize information/data into tables, a blockchain, as the name suggests, organizes data into chunks/blocks that are linked together.

How does Blockchain work?

Transaction Process

(i) Facilitating a Transaction

A new transaction has been requested for the blockchain network, where all data that requires to be transferred is double encrypted by the use of public and private keys.

(ii) Transaction Verification

After that, the transaction is sent through the global network of peer-to-peer computers, where all of the network's nodes will verify the transaction's legitimacy, including if there is enough balance available to complete the transaction.

(iii) New Block Formation

The blockchain network has multiple nodes, and numerous transactions are confirmed simultaneously. A block is made up of several mempools, each of which contains all the validated transactions at a specific node, and the transaction will be included in the mempool after it has been reviewed and confirmed as valid.

(iv) Consensus Algorithm

The nodes that create a block will attempt to add it to the network in order to make it permanent; however, if every node is permitted to add blocks in this way, the blockchain network's functionality will be disrupted. In order to address this issue, the nodes employ a consensus method to make sure that each new block added to the chain represents the single version of the information validated by all the nodes and that only a legitimate block is safely linked to the chain; a hash code for that block is generated by the consensus method and is necessary for adding the block to the chain.

(v) New Block Addition

The newly formed block is now set to be added to the chain after receiving its hash value and being validated; a blockchain is made up of blocks that are cryptographically connected to one another by the hash value of the preceding block, which is included in each block and the open end of the blockchain receives a new block.

(vi) Completion of Transaction

The transaction is finished as soon as the block is added to the chain, and the data is then recorded there permanently; the transaction's information can be accessed and verified by anybody.

Attributes of Blockchain

Though blockchains are typically used to keep the history of cryptocurrency transactions, they also have the potential to store other data, such as digital assets or product inventories.

• It has intrinsic value since it offers a reliable, safe, and quick means of transferring value with minimal to no cost.
• It has no physical form since it only exists on the immutable blockchain.
• The majority of the participants in a cryptocurrency's decentralized network, rather than a single centralized authority, make the decision based on a cryptocurrency's attributes, like its total supply.

Features of Blockchain

Below mentioned are some of the primary features of the Blockchain:

Immutable

The blockchain is considered immutable as it can't be altered or modified. It is therefore said to be a permanent network.

• Blockchain technology works by utilizing a network of nodes; every network node has a copy of the digital ledger, and it assesses a transaction prior to adding it to the network.
• If the majority of the nodes accept that it is authentic, the transaction is added. It implies that no transaction blocks can be added to the ledger without obtaining the approval of the majority of nodes.
• Any records/data that have been verified can't be changed or reversed; this indicates that they cannot be edited, changed, or deleted by any user on the network.

Decentralized

The blockchain network is decentralized, indicating that not only one entity will be in charge of making all of the choices. Instead, a group of nodes creates and maintains the network, and each node has an identical copy of the ledger. The blockchain network's decentralization feature offers several benefits:

• A blockchain network is completely structured and fault-tolerant because it doesn't rely on human computations.
• It makes it less vulnerable to failure due to its decentralized nature.
• There is no involvement/interference of a third party or middlemen; therefore, there is no additional risk associated.
• It makes it simpler to create a transparent profile for every network user; as a result, each change is traceable and more concrete.
• Users can have control over their properties and do not need to depend on third-party to maintain and administer them.

Secure

Each record on the blockchain is individually encrypted, further enhancing the security of the network's process. As there is no centralized authority, it isn't possible to simply add, modify, or remove data from the network.

All the information on the chain is hashed using cryptography, providing each one a unique identity on the network. Any attempt to modify the information would necessitate modifying every hash ID, which is simply not possible. Each block contains its own special hash and the previous block's hash. The blocks are "cryptographically" connected together due to this feature.

Consensus

Consensus is a method of making decisions that allow a group of network nodes to reach an agreement swiftly and effectively, ensuring the system's smooth functioning. Every blockchain has a consensus system that enables the network to make decisions quickly and unbiasedly. Even though nodes may not have much trust in one another, they might have trust in the network's central algorithm. A consensus algorithm is required for any blockchain, or it will lose value. There are numerous available consensus algorithms, each having advantages and disadvantages.

Before records are approved into the network, all the participants must concur that they are legitimate. A node should receive the consent of the majority in order to add a block to the network, or else, the block can't be added. It is not possible for a node to simply insert, alter, or erase data from the network. Every record is updated at once, spreading quickly across the network. Thus, no modifications can be performed until a majority of the network's nodes consent to them.

Benefits of Blockchain

The below mentioned are some of the blockchain benefits:

• One of the primary benefits of blockchains is that it is open to all; this implies that anybody can contribute to this technology, and joining the distributed network doesn't need permission from anyone.
• Blockchain can be used to record data in a decentralized way so that anyone may check the accuracy of the data by employing zero-knowledge proof, wherein one party verifies the accuracy of information to another party while not revealing anything regarding the information.
• Since blockchain is a decentralized system with a large number of trusted nodes, data/information recorded using it is permanent. This implies that one doesn't need to be concerned about losing their data since duplicate copies are maintained at every local node.
• Because it is not controlled by a single party, blockchain is regarded as censorship-free. Furthermore, it uses the concept of trusted nodes for verification and consensus algorithms that validate transactions using smart contracts.
• Since every transaction is stored on a block linked to the others using hashing methods, blockchain provides a higher level of security.
• Due to the decentralized nature of blockchain, it is difficult to alter data; if any alterations are done, it is immediately reflected throughout all nodes, making theft impossible. Therefore, it can be said that transactions are impervious to tampering.
• It makes transaction records visible everywhere since every node in the network has a copy of every transaction, and if there are any modifications made to the transaction, the other nodes can see it.
• Blockchain eliminates any third-party interference in transactions and eliminates errors, making the system more effective and quick. Also, settlement is facilitated and made easy this way.
• Blockchain lowers costs for businesses and builds trust with other partners because it doesn't require a third party.

Applications of Blockchain

Blockchain technology has a wide range of uses in various categories/ fields, some of which are mentioned below:

Healthcare

With smart contracts, blockchain can have a significant effect on the healthcare industry. A contract between two parties can be established through smart contracts without the necessity of a middleman, and the contract's terms are known to all parties, and when its criteria are satisfied, it is immediately put into effect. This could be highly helpful in the healthcare industry since it allows for the encryption of personal health records using Blockchain technology, making them only accessible to primary healthcare practitioners with a key.

Internet of Things

IoT is a system of interconnected devices that can communicate with one another and gather information that may be utilized to obtain valuable insights. The Smart Home, in which all home appliances like lights, air conditioners, speakers, etc., may be linked together on a single platform, could be one of the examples of IoT. Blockchain technology can be utilized to secure this enormously dispersed system; the security of an IoT system can only be as strong as finding the weakest link. In this case, blockchain can be used to make sure that the information collected by IoT devices is secure and accessible to only the right/trusted people.

Food and Medical Industry

Companies may trace their food items/products using blockchain technology from the time they are harvested or manufactured until the point at which they are received by consumers. Blockchain technology could aid in the creation of a digital certificate for every food product, indicating where it originated from and where it has been. As a result, if any contamination is found and the manufacturer decides to return a batch of product due to particular quality concerns, they may track the problem back to its source. A mechanism like this might be used in other sectors too. It could be used to track pharmaceuticals and other common products, as well as to combat counterfeit products by allowing anybody to check to see if the item is from a genuine and authentic manufacturer.

Logistics and Supply Chain Tracking

There are numerous advantages to employing blockchain technology to track products as they move through a logistics or supply chain network.

Firstly, it enables easier communication among parties since information is available on a secure public ledger. It also offers increased security and data integrity due to the immutability of the information on the blockchain. As a result, participants in the logistics and supply chain can collaborate more readily and with more assurance that the information being sent to them is relevant and updated.

Non-Fungible Tokens

NFTs are generally regarded as a means of acquiring ownership of digital art. Due to the blockchain's precluding against information existing in two places, posting an NFT on it assures that there is only a single copy of digital artwork. While NFTs have many applications, at their base, they are a method of transferring ownership over anything that may be represented by data.