Blockchain Technology is a shared database that is distributed among the nodes of a system. As a database, Blockchain Technology keeps the data electronically in digital format.
These are best known for their important role in cryptocurrency systems, like Bitcoin, for keeping a secure and decentralized record of transactions. The uniqueness of Blockchain Technology is that it ensures the fidelity and safety of the record of data and builds trust without the need of a trusted outside party.
One key difference between a typical database and Blockchain Technology is about the assembling of the data.
A Blockchain Technology gathers the information in groups, known as blocks, that holds the set of data. These blocks have specific capacities, and when they are filled, they get closed and attached with the previous filled block.
This results in forming a chain of data which is known as Blockchain Technology. The addition of information is always to that newly added block, it is compiled into a new block which is added to the chain once it is filled.
A database generally settles its data into tables. However, Blockchain Technology keeps its data in blocks that are together.
This data structure automatically makes an irreversible timeline of data when administered in decentralized data.
When a block is filled, it becomes constant and part of this timeline.
Every block in the chain is given a particular timestamp when it becomes a part of the chain.
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Relation Between Blockchain Technology and Bitcoin
Although the commencement of Blockchain Technology has taken the world by blizzards. However, many people still get confused between these two terms. Therefore, it is important to understand these two terms in detail and how are they related.
Bitcoin is a cryptocurrency that is an application of Blockchain Technology. On the other hand, Blockchain Technology is simply an underlying technology behind Bitcoin that is executed via different channels.
Therefore, if you are working on Blockchain Technology and learning Blockchain Technology, you are not learning cryptocurrency but understanding how it actually works.
Working of Blockchain Technology
The characterization of Blockchain Technology can be done as a shared ledger that allows many connected computers or servers to main a single, secured, and immutable ledger. Blockchain Technology can perform user transactions without comprehending any third-party parties.
To perform transactions, a wallet is all that a person needs. A Blockchain Technology wallet is just a program that lets one to invest in cryptocurrencies like BTC, ETH, and many more. Such wallets are safeguarded by cryptographic methods so that one can have full control over his transactions.
Now, this is how Blockchain Technology works. Initially, a block is created when a user curates a transaction over a Blockchain Technology network, showing that a transaction is created.
When the block is made, the requested transaction is broadcasted over the peer-to-peer network, consisting of computers known as nodes, which then establishes the transaction.
A double-checked transaction can involve cryptocurrency, contracts, records, or any other valuable data.
When the transaction is verified, it is joined with other blocks to curate a new block of data for the ledger.
Now, it is crucial to note that with every transaction, a secure Block is created, which is safeguarded and bound to each other using the principle of cryptography. Whenever a new block is made, it is added to the existing Blockchain Technology network, ensuring it is secure and unalterable.
Is Blockchain Technology Reliable?
Blockchain Technology gets decentralized safety and reliability in different ways. To start, new blocks are always stored linearly and chronologically. That means they are always added to the “end” of the Blockchain Technology.
After a block is added to the end of the Blockchain Technology, it is highly chaotic to go back and change the content of the block. This is because every block has its own hash, and with the hash, there is a timestamp at the back and before the hash.
Hash codes are curated by a mathematical function that turns the digital data into a string of numbers and letters. The hash codes change automatically if there is an alteration in information.
Pros and Cons of Blockchain Technology
- Enhanced accuracy by eliminating human involvement, invalidating
- Cost reduction by removing third-party verification
- Decentralization makes it tougher to tamper with
- Transactions are safe, private, and efficient
- The technology is transparent
- It gives a banking alternative
- High technology cost along with mining bitcoin
- Less transaction per second
- Has a history of using illegal activities, like the dark web
- Regulations are different by every jurisdiction and are always uncertain
- Data storage limited
Benefits of Using Blockchain Technology
Now, we are well-versed with what is Blockchain Technology and how it works. So now, let’s jump to what are its benefits.
You should have a reliable system administrator in a traditional database and trust that he will not alter the data. On the other hand, there is not every tiny bit of alteration or changing of the data; the data in the Blockchain Technology is permanent, and no one can delete or undo it.
Centralized systems are not transparent, but Blockchain Technology gives complete transparency. By utilizing Blockchain Technology, companies and enterprises can go for a comprehensive decentralized network where centralized authority is unnecessary. It has therefore improved the transparency of the whole system.
Blockchain Technology is a decentralized system of P2P networks that are highly available due to its decentralized nature. As in the Blockchain Technology network, everyone is on a P2P network, and each one of them has a computer working. Therefore, even if one system is down, the other peers are still working.
This is the other significant advantage of Blockchain Technology. It offers high security as all the transactions of Blockchain Technology are secure cryptographically and also provide integrity. Therefore, instead of putting your trust in a third party, you will have to trust the cryptographic algorithm.
2022 Prediction of Blockchain Technology
Financial Institution Interoperability
As Blockchain Technology has witnessed a boom in 2020 and 2021, many users are showing more interest in the innovative technology than traditional banks and financial services. In response to this increased interest & trust of clients in Blockchain Technology, banks realize that it has massive potential for the financial sector.
To address the different needs of their customers and gain their trust, many traditional and modern financial institutions are adopting Blockchain Technology.
Some of the leading financial institutions have adopted Blockchain Technology –
- HSBC: The well-known bank recently handled two credit transactions using Blockchain Technology between companies in the Gulf region.
- JP Morgan has effectively tapped into the many benefits of Blockchain Technology for automated margin payments.
Adoption of Blockchain Technology in The Retail Industry
2021 has introduced Blockchain Technology into the retail section. And even in 2022, it will continue evolving. The retail section will manipulate these advancements in Blockchain Technology for inventory and supply chain management abilities.
The retail sector took its first steps toward Blockchain Technology adoption in 2016. A partnership between Walmart and IBM helped facilitate payments for multiple retailers and shipping companies while seamlessly tracking all shipping activities using a Blockchain Technology solution.
Then, fast forward to 2018, when IBM collaborated with Maersk to develop an innovative Blockchain Technology-based technology called Tradelens that solves the many challenges associated with freight management.
Other retailers that have adopted Blockchain Technology include Volvo, Nestle, Ford, and even Amazon!
As you can see, Blockchain Technology has a lot to offer the retail sector in 2022.
There are many practical applications for the technology already in use, Blockchain Technology is finally achieving fame of its own in no small part because of bitcoin and cryptocurrency.
In addition to being a buzzword on investors’ tongues, Blockchain Technology promises to make government and business operations more secure, efficient, and accurate, as well as cheaper, with fewer go-betweens.
As we are getting ready to go in the third decade of Blockchain Technology, it is no longer a question whether the companies will adopt it or not!
We hope you have gained enough knowledge of Blockchain Technology. And also, now you might be able to decide whether or not to go for Blockchain Technology!
Do put your opinions up-front through the comment section!