A blockchain is a decentralized, distributed, and oftentimes public list of records in the form of blocks that are joined together using cryptography. In this system, each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. The timestamp proves that the transaction data existed when the block was published step-by-step, which gets into its hash. Each block contains information about the block previous with it; they form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains are resistant to alteration and modification of their data because once recorded, the data in any given block cannot be altered without altering all subsequent blocks.
There are various steps to complete a transaction in a blockchain. Here is a list of step-by-step procedures of how a transaction occurs.
- First of all, a transaction is requested, and then it is authenticated.
- Then a block representing that transaction is created.
- Further, that block is sent to every node or, say participant in the network.
- Those nodes validate the transaction.
- These nodes in return get a reward for proof of work in cryptocurrency.
- The block is then added to the existing blockchain
- The update of the addition of the block is added all over the network.
- And thus the transaction in the blockchain is complete.
POWER OF MINING
According to the Cambridge Bitcoin Electricity Consumption Index, the bitcoin mining network consumes almost 70 terawatt-hours (TWh) of electricity per year, ranking it the 40th largest consumer of electricity by ‘country’.
Decentralization refers to the transfer of control and decision-making from a centralized entity like an individual, organization, or group to a distributed network in blockchain technology. When building a technology solution, three primary network architectures are specifically considered. They are centralized, distributed, and decentralized.
Blockchain technologies often make use of decentralized networks; it is a sliding scale that should be applied to all aspects of a blockchain application. By decentralizing the management of data and access to resources in an application, greater and fairer service can be achieved. Decentralization has some tradeoffs like lower transaction throughput, but ideally, the tradeoffs are worth the improved stability and service levels they produce.
ADVANTAGES OF BLOCKCHAIN
1. Better security
Your data is crucial and personal, and blockchain can definitely modify how your critical information is viewed by creating a record that can’t be changed and is encrypted end-to-end. Blockchain helps in preventing fraud and unauthorized activities. Information is stored across a network of computers rather than a single server, which makes it complex for hackers to view data. Privacy issues can also be addressed on it using permissions to prevent access.
2. Greater transparency
Every business has to keep a separate database and blockchain uses a distributed ledger, transactions and data are reserved parallelly in various locations. All network participants with authorized access are able to see the same information at the same time, providing full transparency. All transactions are time- and date-stamped. This enables members to view the entire history of a transaction and restricts any possibility for fraud.
3. Saves time
The traditional method of paper-heavy processes is time-consuming, most likely to cause a human error, and often requires third-person involvement. By changing these processes to the blockchain, transactions can be completed faster and more efficiently. Documentation can be easily stored on the blockchain along with all the transaction details, eliminating the requirement to exchange paper. As there is no need to reconcile multiple ledgers, clearing and settlement can be much easier and faster.
4. Supply chains and food
Developing trust between trading partners, providing end-to-end encryption, and resolving issues faster with blockchain all add up to stronger supply chains and improved business relationships. Moreover, participants can move faster in the event of disruptions. In the food industry, blockchain helps to ensure food safety and freshness, and reduce waste and even in contamination, food can be traced back to its source in seconds instead of days.
In an industry affected by data breaches, blockchain helps healthcare improve security for patient data parallelly making it easier to share records across providers, payers, and researchers and the access that remains in the hands of the patient, increasing trust.
FUTURE OF BLOCKCHAIN
Blockchain technology has made vital changes in its popularity in a couple of years, and there’s no sign of it slowing down. According to Deloitte’s 2021 Global blockchain development Survey, almost 76% of executives surveyed said they expect digital assets will be a solid alternative to fiat currencies for global finance in the next 5–10 years.
This indicates that it’s time to prepare for a financial and social revolution that will change how we process transactions, manage data and deliver services. Blockchain is still not widely or systematically recognized. People still know it as the technology powering cryptocurrency similar to bitcoin. Till now, blockchain is only an application and people don’t realize exactly how blockchain can help them, their organization, or even society.
The opportunities offered by blockchain technology are truly wide, and developments in the last few years have taken one step closer to a decentralized internet, transparency of transactions, and more.