Blockchain is a transparent, secured, incorruptible and distributed digital ledger and a continuously growing list of records called blocks. It uses cryptography which is in form of hashes to secure it's its transactions. Blockchain has a major role to play in business sector which will be discussed.
What are the blockchain's main benefits?
With the use of blockchain technology, the monetary transaction becomes much cheaper.
It helps to enhance the online shopping and e-commerce, of course, are facilitated by online transactions. Obsolete financial transaction systems become complicated to transfer financial assets. These systems are not safe. The main commercial operations through blockchain have allowed the introduction of new forms of digital interoperability.
Blockchain has several benefits:-
By decentralized, it simply means that blockchain does not rely on central authority to perform its transactions. However, the fees that are normally collected by the organisations or Government parastatal are no longer viable.
- Transparency and trust
By transparency and trust we mean that a reliable third party or an intermediary does not need to validate the transactions; instead, a consent mechanism is used to agree on the validity of the transactions.
Because blockchains are shared and everyone can see what is contained in the block, this allows the system to be transparent and to establish the resulting trust between third parties thereby cutting off third-party intermediary. This is more relevant in scenarios such as the provision of funds or benefits where personal discretion should be limited.
Once the data has been written in the blockchain, it is extremely difficult to change them again. It is not really immutable, but due to the fact that changing data is extremely difficult and almost impossible; This is seen as an advantage to keep an immutable record of transactions.
- High availability
Blockchain technology system relies on thousands of nodes in a point-to-point network and the data is replicated and updated in each of the nodes, the system becomes highly available. Even if the nodes leave the network or become inaccessible, the network as a whole continues to function, making it highly available.
- Highly secure
All transactions in a chain of blocks are cryptographically encrypted.
- Simplification of current paradigms
The current model in many sectors, such as finance or health, is rather disorganized, in which multiple entities manage their databases and the exchange of data can be very difficult due to the disparate nature of the systems. But because a chain of blocks can act as a single ledger shared between stakeholders, this can result in the simplification of this model by reducing the complexity of managing the separate systems managed by each entity.
- Faster dealings
In the financial sector, particularly in post-trade settlement functions, blockchain can play a vital role by allowing faster transaction settlement, as it does not require a lengthy verification, reconciliation and liquidation process because a single version of the agreed data is now available in an accounting book shared among financial organizations.
- Cost saving
Since no third parties or clearinghouses are required in the blockchain model, this can massively eliminate general costs in the form of commissions paid to clear houses or trusted third parties.
- System Reliability
Because the data structure used by this technology allows users to execute and verify transactions without the participation of external developers, it greatly reduces the risk of unauthorized interference.
What type of transactions can blockchain handle
Let's use the case of bitcoin to demonstrate the power of blockchain. A public record of all bitcoin transactions that have ever been executed is known as Blockchain. A block is the current part of a chain of blocks that records recent information. Once a block is completed, it enters the blockchain as a permanent database creating a new block. The blocks are linked together as a string in the proper chronological order. Each block contains a hash of the previous block. Blockchain technology is one of the most interesting and attractive technologies on the market.
E.g. Banking sector
The blockchain is a complete history of banking transactions.
Bitcoin transactions are entered chronologically into a chain of blocks: banking transactions.
The blocks are the individual bank statements.
The complete blockchain copy has records of every bitcoin transaction ever executed.
From a technical point of view, the most fundamental definition of a transaction is an atomic event allowed by the underlying protocol.
In the case of bitcoin, transactions are usually individual payments.
• Bob sends Alice 10 BTC
If the word transaction evokes a financial transaction in your mind, this is appropriate. Bitcoin blockchain is basically a list of all bitcoin transactions since Bitcoin started.
However, bitcoin is just one of many blockchains. Not all blockchains limit their utility to payment transactions. The Ethereum blockchain is similar to Bitcoin (since it can handle payments), but it also stores other types of information. For example, you can store a program in the Ethereum blockchain that tracks who owns what deeds for home ownership.
The program may also be responsible for reversing the property if a mortgage is not paid on time, or you could transfer the property to someone when you turn 18, etc.
So, as Janhvi Parikh explains in an adjoining answer to this question, Transactions are payments when you think of the blockchain as a distributed ledger that keeps track of who owes how much bitcoin.
As Vamsidhar Reddy also points out, if you think of the blockchain as a data structure, then a transaction is just an event that updates the data store. The only difference is that instead of an event updating a data table on a machine, a single event would update a data table on every connected machine on the planet.
In the case of Ethereum, blockchain allows you to store programs so it, looks more like a distributed computer. The Ethereum blockchain tracks the commands issued and then executes them in sequence.
Each new transaction changes the status of this computer. At any given moment, the Ethereum blockchain defines the current state of a global computer.
Each transaction is actually a command, and the "execution" of all these commands results in a state that is the state of the Ethereum computer.
In this way, defining a blockchain transaction depends on what blockchain you are talking about. Ultimately, a transaction is a unique event allowed by the underlying protocol.
What's driving blockchain adoption
Blockchain technology can be a daunting task in the beginning, as it involves a combination of software engineering, cryptography, mathematics, information security and data structures that work in the protocol layer, not in the application layer where the majority interacts with the Internet. The challenge is to democratize the blockchain application so that anyone can use it or build it.
To create greater access, a "user interface" moment has been developed, a time when a difficult-to-use technology acquires exponentially adoption through an easy-to-use interface. This is what happened to the Internet in the 90s and cell phones in the 2000s. As people built on these new platforms, they were able to create applications that generate revenue accessible to millions of people.
This is an achievable goal. Blockchain developers and enthusiasts are working to make the implementation of blockchain technology easy and accessible for business people with limited technical knowledge. They will do this by creating an easy-to-use user interface and understanding that anyone can use and adopt blockchain technology. These cities are "urbanists". They are creating a set of visual tools that allow people to quickly develop applications in hours and then link these applications to the chain of blocks of their choice.
The next level of infrastructure for blockchain, shortening the gap between the protocol level and the end user while driving modern design in the application's user interfaces, and this will have a huge democratizing effect on the future of blockchain technology. The timing of the user interface for blockchain is imminent.
How will blockchain be used in the years ahead?
For most people, blockchain technologies are inseparable from bitcoin, the cryptocurrency that has been particularly noticeable in the recent news due to its hyper volubility. Cryptologists have made and lost millions and many people have used their business in a full-time job. But blockchain technology, which allows immutable recordings of activities, stored in a ledger that is stored not only in one place but is widely distributed, has applications in all imaginable areas of commerce and beyond. Soon, there will be blockchains everywhere where transactions occur virtually in almost all the sectors - hospitals, insurance companies, banks, taxations, agriculture and many more.
Blockchain technology has the potential to help us build a better world.
How far away are we from seeing blockchain emerging as the mainstream technology
Obviously, Blockchain is getting close to its peak, but it would need 5-10 years to become mainstream. Blockchain technology will become mainstream much faster than expected.
Companies such as JP Morgan and IBM have already developed Blockchain platforms for the company, Quorum, and Hyper Ledger Fabric, respectively. There is also Ethereal, which is a public Blockchain and a development platform.
In my opinion, the global adoption of Blockchain technologies will depend on the speed with which they can solve some of the known problems, namely scalability, and performance.
Scalability: Currently this is the biggest threat to Blockchain technologies. For example, Bitcoin Blockchain has only 160 GB and is already slow enough to require a transaction between 3 days and weeks to be confirmed.
Throughput: This is related to the problem of scalability. The writing speed in existing blockchain technologies is very slow. The Bitcoin blockchain supports 1-3 points, while Visa supports 2000-10000 tips.
Latency: If Blockchain technologies need to create a place in End technology, they will have to improve latency. A block in the Bitcoin chain of blocks takes 10 minutes to process. In contrast, a Visa transaction is confirmed in seconds.
There are already solutions to solve these problems. There are DB Big Chain, IOTA Tangle, and many others. Even the Hyper Ledger Fabric is much faster than the Bitcoin blockchain.
Does the technology have any flaws or potential weakness?
People in the blockchain industry have indicated that the block diagram is indeed exaggerated; like all technologies, this technology has some limitations and is not suitable for many digital companies but with the research and development, success and failure, as well as trial and error, the current problems and constraints in the chain.
Blockchain technology means a whole new vocabulary. This has made cryptography more frequent, but the highly specialized industry is full of jargon. Fortunately, there are several efforts to provide glossaries and indexes that are careful and easy to understand.
2. Network size
Blockchains (like all common systems) are less resistant to bad actors because they are "fragile", that is, they react to attacks and become stronger. However, a large user network is needed. If the block circuit is not a solid network with a widespread network of nodes, it becomes harder to get a full benefit.
Transaction costs/network speed
Currently, Bitcoin has significant transaction costs, after it was considered "almost free."
In 2016, it can handle only about seven transactions per second, and each transaction costs approximately $ 0.20 and can store only 80 bits per second.
There is also a politically charged aspect of bitcoin blocks for use, not as transactions, but as a repository of information.
3. Human error
If the block circuit is used as a database, the information entered in the database must be of high quality. The data stored in the data block is not really secure, so events must be recorded accurately from the start. The phrase "waste at landfills" is true in the registry blockade system, just as in a centralized database.
4. Unavoidable security flaw
There is a significant security flaw in bitcoins and other blockchains: if more than half of the computers that function as nodes to serve the network say a lie, the lie will become the truth. It is called "50% attack" and was highlighted by Satoshi Nakamoto when he launched Bitcoin.
For this reason, the community closely monitors bitcoin mining groups, which ensures that nobody, without knowing it, gains such influence in the network.
Blockchain protocols offer the opportunity to digitize governance models, and because miners are essentially forming another type of incentive government model, there have been ample opportunities for public disagreement between different sectors of the community.
These disagreements are a notable feature of the blockchain industry and are more clearly expressed around the "bifurcation" question or event of a chain of blocks, a process that involves updating the blockchain protocol when most users a blocked chain does it. I accepted these debates can be very technical, and sometimes heated, but they are informative for those interested in the mix of democracy, consensus and new opportunities for experimentation in the governance that blockchain technology is opening up.
Biggest misconception people have about blockchains
- People who know about blockchain can talk good things and bad things about the blockchain technology. Now take a look at the misconceptions people talk about blockchain:
The blockchain is a giant, distributed computer; That's totally wrong. Well, all the nodes that maintain blockchain technology do exactly the same thing. And here is what millions of computers do:
1. Computers verify the same transactions with the same rules and perform identical operations.
2. Computers also record the same as a chain of blocks.
3. Computers even store the complete history, which is the same for all of them, of all times
- The blockchain is everlasting and everything that is recorded into a blockchain will remain there forever
For a long time, Bitcoin has been divided into enthusiasts, who are downloading everything and in the entire chain of blocks, they are storing in their computer. In addition, ordinary people who use online portfolios trust the server and do not care about how it works. The blockchain is effective and scalable. Soon, conventional money will disappear. The blockchain is decentralized, so it is indestructible. Although many people with blockchain technology are long-term customers in these areas, they prefer to talk about business and its endless opportunities, especially with a good company.
Blockchain technology can be integrated into multiple areas. The primary use of blockchains today is as a distributed ledger for cryptocurrencies, most notably bitcoin.
- Smart contracts
Smart contracts based on blockchain are proposed contracts that could be partially or completely executed or applied without human interaction. One of the main objectives of a smart contract is automated commitment. A discussion on IMF staff reported that smart contracts based on blockchain technology could reduce moral hazards and optimize the use of contracts in general. But "feasible smart contract systems have not yet emerged." Due to the lack of widespread use of their legal status, it is not clear.
The main parts of the financial sector are implementing distributed registers for use in the banking sector and, according to an IBM study in September 2016, this is happening faster than expected.
Banks are interested in this technology because it has the potential to accelerate the back office settlement systems. Banks like UBS are opening new research labs dedicated to blockchain technology to explore how blockchain can be used in financial services to increase efficiency and reduce costs.
Blockchain technology can be used to create a permanent, public and transparent accounting system to collect sales data, monitor digital usage and make payments to content creators, such as wireless users or musicians. In 2017, IBM collaborated with ASCAP and PRS for music to adopt blockchain technology in music distribution. Imogen Heap's Myogenic service has also been proposed as an alternative based on blockchain "that gives artists greater control over how their songs and associated data circulate between fans and other musicians." Ever ledger is one of the first customers of the tracking service based on IBM blockchain.
Comments here are not of the author's opinion. Users are responsible for their comments.