What is Blockchain
According to Wikipedia, Blockchain is the distributed database which maintains a continuously growing list of sequential record of transactions in the form of a block.Each block contains a timestamp and a link to a previous block.By design, blockchains are inherently resistant to modification of the data — once recorded, the data in a block cannot be altered retroactively. Through the use of a peer-to-peer network and a distributed timestamping server, a blockchain database is managed autonomously. Blockchains are “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”
Let us try to understand what Blockchain is, using a short video below.
By design, blockchains are inherently resistant to modification of the data — once recorded, the data in a block cannot be altered retroactively. Through the use of a peer-to-peer network and a distributed timestamping server, a blockchain database is managed autonomously. Blockchains are “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.
The first blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency bitcoin, where it serves as the public ledger for all transactions.The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem, without the use of a trusted authority or central server. The bitcoin design has been the inspiration for other applications.
A blockchain database consists of two kinds of records: transactions and blocks.Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree. Each block includes the hash of the prior block in the blockchain, linking the two. Variants of this format were used previously, for example in Git, and it is not by itself sufficient to qualify as a blockchain. The linked blocks form a chain. This iterative process confirms the integrity of the previous block, all the way back to the original genesis block. Some blockchains create a new block as frequently as every five seconds. As blockchains age they are said to grow in height. Blocks are structured by division into
By storing data across its network, the blockchain eliminates the risks that come with data being held centrally.Decentralized blockchains may use ad-hoc message passing and distributed networking. Its network lacks centralized points of vulnerability that computer hackers can exploit or any central point of failure. Blockchain security methods include the use of public-key cryptography. A public key (a long, random-looking string of numbers) is an address on the blockchain. Bitcoins sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their digital assets or otherwise interacts with the various capabilities that blockchains now support. Data stored on the blockchain is generally considered incorruptible.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
Durability and robustness
Blockchains are decentralized which minimizes the failure rate, hence increases its durability and It is like the Internet, which has a built-in robustness.
The blockchain format was first used for bitcoin, as a solution to the problem of making a database both secure and not requiring a trusted administrator.The words block and chain were used separately in Satoshi Nakamoto’s original paper in October 2008, and when the term moved into wider use it was originally block chain, before becoming a single word, blockchain, by 2016. In August 2014, the bitcoin blockchain file size reached 20 gigabytes. In January 2015, the size had grown to almost 30 gigabytes, and from January 2016 to January 2017, the bitcoin blockchain grew from 50 gigabytes to 100 gigabytes in size.
Transparent and incorruptible
The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Two important properties result from this:
data is embedded within the network as a whole, by definition it is public.
It cannot be corrupted
altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.
In theory, this could be possible. In practice, it’s unlikely to happen. Taking control of the system to capture Bitcoins, for instance, would also have the effect of destroying their value.
Business Applications of Block Chain
Blockchain shows great promise across a wide range of business applications
For example, financial institutions can settle securities in minutes instead of days. Manufacturers can reduce product recalls by sharing production logs with original equipment manufacturers (OEMs) and regulators. Businesses of all types can more closely manage the flow of goods and related payments with greater speed and less risk.
- Media and Entertainment
- Supply Chain and Logistics
- Finance and Accounting
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Source: Various websites