UNDERSTANDING BLOCKCHAIN
"What if all the transactions you made were recorded in such a way that they are tamper proof and completely transparent? Enter the world of blockchain, where trust is built into the technology."
What is Blockchain Technology?
A blockchain is a special type of database that stores Data/Information in chains of blocks. This database is Decentralized and modifying of data in blocks is near to impossible which makes blockchain more trustworthy than normal databases. Blockchain Technology came in early 1990's but its real implementation is in 2009 when some anonymous user name SATOSHI NAKAMOTO made Bitcoin with the help of Blockchain from then on the their is a boom of Cryptocurrency in the world. In simple terms it is a type of ledger used in shops to note down various sales and purchase but it's data is stored in many blocks.
Why we need Decentralized and Non-Modifiable Database?
As we all know that there many under the table transaction in terms of cash which we call as black money, this information of black money is stored somewhere but we can't trust the information because it is being controlled by a person so it's data is unreliable, so we need a database on which we can trust and rely and from this Blockchain is developed.
How the Blockchain works?
The block in the blockchain contains:
-DATA
The Data that is stored inside a block depends on the type of blockchain for example the bitcoin blockchain stores the details of transactions such as sender, receiver and the amount of coins.
-HASH OF PREVIOUS BLOCK
It stores the hash of the previous block which thus creates a chain of blocks.
Proof of Work
Proof of Work (PoW) is a blockchain consensus that requires a large amount of computation from a network of devices. The concept was adapted from digital tokens in 2004 by Hal Finney through the concept of "Reusable Proof of Work" using 160-bit Secure Hash Algorithm 1 (SHA-1).
Proof of Stack
Proof of stake (PoS) is the consensus used to verify transactions and create new blocks on blockchains. In PoS, participants called validators record cryptocurrency in smart contracts on the blockchain and are randomly selected to make transactions and receive rewards. If a person confesses false or fraudulent information, some or all of their participation may be forfeited in penalties.
APPLICATIONS OF BLOCKCHAIN
There are many real world applications of Blockchain:
-CRYPTOCURRENCIES
These are digital or virtual currencies and they operate on blockchain technology. This Currency is decentralized and rely on distributed ledgers maintained by a network of computers.
Examples: BITCOIN, Ethereum, Ripple, Litecoin
-SMART CONTRACTS
It was first used by Nick Szabo in 1997 even before bitcoin was created. These are just like contracts in the real world but contracts are made digital and the program is stored in blocks.
It can be used in banks for loan and automated payments purposes, in insurance company for claiming the loan etc.
-SUPPLY CHAIN MANAGEMENT
Blockchain can improve the quality of the supply chain by speeding up the supply chain, making products more efficient, improving product traceability, improving collaboration between partners, and helping to get money.
Conclusion
So we learned about blockchain technology how it is decentralized and very hard to modify, it is a distributed ledger. It also contains block that stores the data create unique HASH that identifies the block and also has HASH of previous block that forms the chain of blocks. We also seen the application of the blockchain, how it is used in cryptocurrencies, smart contracts and supply chain management. The future of blockchain is very prominent and dominating and the glimpse of it can be seen today of how the bitcoin trading is and the use of bitcoin in trading has increased.
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