When you are dealing with transaction value, it is essential to have accurate information and verifying sources of thing for doing transaction securely. In that case, you need to have a reliable system on that you can trust and which is tamper-proof. But today, we are dealing with the internet fraud, malware, and hacks of major institutions like banks, organizations, or Internet service providers getting cyber hacked. How can you trust the quality and integrity of the information that you are getting? The answer is in a technology called Blockchain. A Blockchain can provide a single source of truth that is verifiable, tamper-proof, and unchangeable.
What is Blockchain?
A Blockchain is a constantly growing ledger that keeps a permanent record of all the transactions that have taken place, in a secure, chronological, and immutable way.
Let's breakdown the definition,
- Ledger: It is a file that is constantly growing.
- Permanent: It means once the transaction goes inside a blockchain, you can put up it permanently in the ledger.
- Secure: Blockchain placed information in a secure way. It uses very advanced cryptography to make sure that the information is locked inside the blockchain.
- Chronological: Chronological means every transaction happens after the previous one.
- Immutable: It means as you build all the transaction onto the blockchain, this ledger can never be changed.
A Blockchain is a chain of blocks which contain information. Each block records some or all of the recent transactions, and once completed goes into the Blockchain as a permanent database. Each time a block gets completed, a new block is generated.
Note: A blockchain can be used for the secure transfer of money, property, contracts, etc. without requiring a third-party intermediary like bank or government. Blockchain is a software protocol, but it could not be run without the Internet (like SMTP used in email).
Who uses the blockchain?
Blockchain technology can be integrated into multiple areas. The primary use of blockchains is as a distributed ledger for cryptocurrencies. It shows great promise across a wide range of business applications like Banking, Finance, Government, Healthcare, Insurance, Media and Entertainment, Retail, etc.
Need of Blockchain
Blockchain technology has become popular because of the following.
- Time reduction: In the financial industry, blockchain can allowing the quicker settlement of trades. It does not take a lengthy process for verification, settlement, and clearance. It is because of a single version of agreed-upon data available between all stack holders.
- Unchangeable transactions: Blockchain register transactions in a chronological order which certifies the unalterability of all operations. It means when a new block has been added to the chain of ledgers, it cannot be removed or modified.
- Reliability: Blockchain certifies and verifies the identities of each interested parties. This removes double records, reducing rates and accelerates transactions.
- Security: Blockchain uses very advanced cryptography to make sure that the information is locked inside the blockchain. It uses Distributed Ledger Technology where each party holds a copy of the original chain, so the system remains operative, even the large number of other nodes fall.
- Collaboration: It allows each party to transact directly with each other without requiring a third-party intermediary.
- Decentralized: It is decentralized because there is no central authority supervising anything. There are standards rules on how every node exchanges the blockchain information. This method ensures that all transactions are validated, and all valid transactions are added one by one.