What is blockchain?
How does a blockchain work?
Three pillars of blockchain technology
Who will use blockchain?
Private vs public?
How secure is blockchain?
What is blockchain good for?
Pros and cons
What’s next in Blockchain?
If you have been following banking, investing or cryptocurrency over the last
ten years, then the word Blockchain must be familiar.
The record keeping technology behind the Bitcoin network.
What is Blockchain?
Blockchain is a public electronic ledger built around a P2P system.
It can be openly shared among disparate users to create an unchangeable
record of transactions, each being time-stamped and linked to previous one.
Every time a set of transaction sis added, that data becomes another block in
It can be only updated by consensus between participants in the system.
Once a new data is entered it can never be erased.
It is write-once, append-many technology, making it a verifiable and auditable
record of each and every transaction.
How a Blockchain works?
When a block stores new data it is added to the blockchain. As the name
suggests, it consists of multiple blocks strung together.
Picture a spreadsheet that is duplicated thousands of times across a network
of computers. Then imagine that this network is designed to regularly
update this spreadsheet.
How a Blockchain works?
Information held on a blockchain exists as a shared and continually reconciled
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.
Pillars of blockchain technology
There are three main properties which have helped it gain widespread acclaim:
Before Bitcoin and BitTorrent centralized services were used.
The idea of a centralized entity is that it stores all the data and you have to
interact solely with this entity to get whatever information you require.
For example: centralized systems in banks, traditional client -server model
Though centralized systems have treated us very well for years they have
In a decentralized system, the information is not stored by one single entity.
Everyone in the network owns the information.
Third party involvement is nullified. This is the main ideology behind
Most interesting and misunderstood concepts in blockchain is transparency.
Some say that blockchain gives you privacy while some say that it is
A persons identity is hidden via complex cryptography and represented only
by their public address.
So, if you look up a person’s transaction history, you will not see “Bob sent to
1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvmT2TbyCt7NZJ
sent to 1 BTC’.
Though 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 been existed before within a financial
It adds extra and much needed level of accountability.
Snapshot of Ethereum transactions
Immutability means that once something has been entered into the blockchain,
it cannot be tampered with.
Can u imagine how valuable this will be for financial institutes?
The embezzlement cases can be nipped in the bud itself if people know that
they cant fiddle around with company accounts.
The reason why the blockchain gets this property is that of the cryptographic
Hashing means taking an input string of any length and giving an output of a
In context of cryptocurrencies like bitcoin, the transactions are taken as input
and run through a hashing algorithm which gives an output of a fixed length.
We are going to put in certain inputs. Here we are using SHA-256 algorithm.
In the case of SHA-256 no matter how big or small your input is, the output
will always have a fixed 256-bits length.
This becomes critical when you are dealing with huge amount of data and
Who will use Blockchain?
As a web infrastructure, you don’t need to know about the blockchain for it
to be useful in your life.
Currently, finance offers the strongest use cases for the technology.
International remittances, for instance.
The World Bank estimates that over $430 billion US in money transfers
were sent in 2015, and at the moment there is a high demand for blockchain
Who will use Blockchain?
The blockchain potentially cuts out the middleman for these types of
Personal computing became accessible to the general public with the
invention of the Graphical User Interface (GUI), which took the form of a
Similarly, the most common GUI devised for the blockchain are the so-
called “wallet” applications, which people use to buy things with bitcoin
and store it along with other cryptocurrencies.
Transactions online are closely connected to the processes of identity
It is easy to imagine that wallet apps will transform in the coming years to
include other types of identity management.
Public vs Private Blockchain
As a peer-to-peer network, combined with a distributed time-stamping
server, public blockchain ledgers can be managed autonomously to
exchange information between parties. There's no need for an administrator.
In effect, the blockchain users are the administrator.
A second form of blockchain, known as private or permissioned blockchain,
allows companies to create and centrally administer their own transactional
networks that can be used inter- or intra-company with partners.
How secure is Blockchain?
Blockchain’s simple topology is the most secure today, according to Lex
Tapscott, the CEO and founder of Northwest Passage Ventures, a venture
capital firm that invests in blockchain technology companies.
"In order to move anything of value over any kind of blockchain, the
network [of nodes] must first agree that the transaction is valid, which
means no single entity can go in and say one way or the other whether or
not a transaction happened," Tapscott said.
"To hack it, you wouldn't just have to hack one system like in a bank...,
you'd have to hack every single computer on that network, which is fighting
against you doing that.
"So again, [it's] not un-hacakable, but significantly better than anything
we've come up with today," he said.
What is Blockchain good for?
Blockchain network gives internet users the ability to create value
and authenticates digital information.
What new business applications will result from this?
The sharing economy
Supply chain auditing
Protection of intellectual property
Internet of Things (IoT)
Pros and Cons
Improved accuracy by removing human involvement in verification
Cost reductions by eliminating third-party verification
Decentralization makes it harder to tamper with
Transactions are secure, private and efficient
Pros and Cons
Significant technology cost associated with mining bitcoin
Low transactions per second
History of use in illicit activities
Susceptibility to being hacked
What’s next for Blockchain?
Blockchain has seen its fair share of public scrutiny over the last two
decades, with businesses around the world speculating about what the
technology is capable of and where it’s headed in the years to come.
With many practical applications for the technology already being
implemented and explored, blockchain is finally making a name for itself, in
no small part because of bitcoin and cryptocurrency.
As a buzzword on the tongue of every investor in the nation, blockchain
stands to make business and government operations more accurate,
efficient, and secure.
As we prepare to head into the third decade of blockchain, it’s no longer a
question of "if" legacy companies will catch on to the technology—it's a
question of "when."
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