Get To Know Blockchain and Its Application To Our Daily Life
🔥 Today’s famous crypto-related projects, including prominent GameFi projects, renowned cryptocurrencies, and dynamic NFT marketplaces are all greatly powered by blockchain technology. This state-of-the-art technology has proven its massive advantages in security and transparency and is entrusted by various organizations and developers hoping to integrate their system onto blockchain. Exactly why is blockchain technology becoming a crucial part in the modernization progress? We need to first understand how blockchain works.
💎What is blockchain ?
A blockchain is a decentralized, distributed, and public digital ledger that is shared across the nodes of a computer network. This ledger consists of a list of data records, and these records include data blocks that are arranged chronologically, connected, and protected by cryptographic proofs. Each block stores a cryptographic hash from the previous block, as well as its date and time. This way, the ever-growing database hosted on blockchain is guaranteed to be tamper-evident and will not be modified unless a mass modification is conducted on all following blocks, and the consensus of the network.
The concept of blockchain is integrated with various technologies and computing programs, and is mostly utilized in the cryptocurrency systems, smart contracts, and distributed ledger systems for businesses to keep a decentralized and immovable record of transactions.
💎How Does Blockchain Work?
As mentioned above, blockchain’s data structure comprises groups of information called blocks. Each block has a specific storage capability, and when filled, they are sealed and connected to the previously filled block, creating a data chain, hence the term “blockchain”. Every piece of information coming after will be going in a new block, and this block is closed once it is filled.
Fundamentally, blockchain holds four key features:
– Distributed Ledger: is a system of the record shared across a corporate network. All computers in the area have access to this record. Transactions are recorded only once via this shared ledger, which results in the complete prevention of double-spending, a common issue in traditional business networks.
– Hash Code: is a digital fingerprint or unique identifier that functions as a converter, which converts input commands to codes comprehended by the blockchain systems. By this, transaction information is secured and preserved between related parties.
– Smart Contracts: is a type of agreement that regulates a business transaction. A smart contract is kept on the blockchain and executed automatically as part of a transaction. Additionally, it is also a method of information extraction for users to comprehend the data on blockchain.
– Consensus: is a mechanism in which an approval must be given by all parties for a transaction to go through. There are various consensus mechanisms, such as proof of stake, multisignature, and PBFT (practical Byzantine fault tolerance).
✨ Some of the primary roles within a blockchain network include:
– Blockchain users: are members given permission to access the blockchain network. Most of the time, they are business users who utilize this technology to coordinate transactions with fellow business partners who are also on the blockchain.
– Regulators: are people who have authority over monitoring transactions inside the network.
– Blockchain network operators: are individuals with special permissions to define, construct, operate, and maintain the blockchain networks.
– Certificate authorities: are people in charge of creating and maintaining the various kinds of certificates needed to operate a permissioned blockchain.
💎Blockchain’s Application to Daily Life
First proposed and came into operation in 2008 by a person (or group of people) with the pseudonym of Satoshi Nakamoto, blockchain technology served as the publicly distributed ledger for Bitcoin cryptocurrency transactions. Bitcoin installed with this technology has later become the first digital currency to overcome the double-spending issue without the aid of a central server or a trusted authority.
✨ Many technologies inspired by this model aim to expand the use of blockchain outside its confined purpose of supporting cryptocurrencies operation, namely:
- Payment processing and monetary transaction: Banking transfer costs may be reduced (or completely removed) and transactions performed through a blockchain may be finalized in a couple of seconds.
- Supply chain surveillance: Businesses may use blockchain to swiftly identify bottlenecks in their supply chains, locate things in real-time, and control the quality of their products during transactions from manufacturers to retailers.
- Digital IDs: This feature is being experimented with by Microsoft in order to provide users control over who may access their data and to assist them in managing their digital identities.
- Data sharing: Blockchain may serve as a middleman to transfer and store business data securely between sectors thanks to its tamper-evident and alter-proof features.
- Copyright and Royalties protection: Blockchain technology could be utilized to build a decentralized database that guarantees the preservation of music rights and rewards musicians with transparent and real-time royalties. Open-source programmers could also make use of this mechanism at their end.
- Internet of Things (IoT) network management: The IoT mechanism encrypts and secures information between smart devices and is commonly utilized at enterprises level. Blockchain puts this mechanism under control to identify devices connected to a wireless network and monitor their activities, as well as conduct assessment over how trustworthy new devices being added to the network are.
- Healthcare: Healthcare payers and vendors may utilize blockchain to handle clinical trials data and electronic medical records while preserving regulatory compliance.
Blockchain may serve as a database to record network activities, but its benefits exceed that of a traditional database for these reasons:
- Savings in time: Transaction times on blockchain are remarkably reduced from days to minutes due to the redundancy of central authority verification.
- Cost reductions: Transactions require less supervision and direct exchange of valuables is allowed between participants. Additionally, blockchain prevents double-spending since users have access to a shared ledger.
- Increased security: The security characteristics of blockchain eliminates the potential of frauds, manipulation, and cybercrime.
Blockchain technology’s advancement and exclusive benefits easily make itself to be recognized in the modernization era. Efforts have been made for cryptocurrencies, NFTs, and metaverse to be available to more people due to the same reason. And blockchain technology will undoubtedly be utilized to aid humanity in the future.
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