Want to satisfy your deeds of experiencing a digital life where you had no stress managing your money, directly sending it to whomever you want to, and no more wasting time finding your wallet? You have a virtual wallet now, where all your digital currency is stored safely and securely.
Yes, this is the new meaning of possessing and trading the value.
Digitized the way we think and now digitized the currency we use. Since the evolution of the digital environment, everywhere we spot technology growing at the speed of a bullet train. One thing that actually came into the hype is the hoisting of digital currency, and this digital currency management brought into the emergence of the blockchain database.
In fact, the above case is just one of those examples of using blockchain technology and how it has swapped the way of perceiving business-making technology in the digital era. While it is just a beginning for blockchain because the latter has covered many exciting features, let’s go on to know how blockchain technology has put up its cult in every individual’s mind.
Why is blockchain so hyped?
The blockchain concept is a distributed database or an immutable ledger technology shared among different network nodes to accomplish transactions and track assets in the enterprise network environment. The blockchain aids in providing secured and distributed recordings of bitcoin transactions.
Blockchain technology has the data which gives real-time access and complete transparency amidst a trusting environment. It carries an easy step in processing throughout the operating system. Blockchain secures encrypted information when shared among different distributors, not copied or transferred. In contrast, it is decentralized and is guaranteed under the immutable record of assets.
How blockchain technology works?
The working of blockchain is conceptualized in a way that the data is distributed and recorded instead of edited or altered. The blockchain database is wholly structured compared to the typical form. Defining the working process of blockchain technology usually follows in three parts.
- Blocks – a blockchain collecting loads of information in groups is called a block which consists of a particular storage capacity. When filled, the blocks get attached to the previously served block and hence form a blockchain.
The blocks contain a nonce, a 32-bit whole number that generates a block header hash. This hash is a 256-bit number that starts with many zeroes. So when the new block forms, nonce produces a cryptographic hash, and these hash and nonce get tied to the data in the block unless it gets extracted.
- Nodes – it is a kind of electronic device that keeps the perfect maintenance and network functioning of the blockchain. Each node owns a copy of the blockchain where every change in the algorithm or new addition of the block in the chain is visible, whereas the actions must be verified, updated and confided.
- Miners – mining helps in creating a new block in the chain. Mining isn’t an easy process because you have nonce and hash connected to the block’s data in a chain, and breaking such large chains is complex. By using special software, the miner solves out to find the golden nonce that generates the recognized hash and makes the change by adding that new block in the chain.
Within such operating conditions, the blockchain maintains the integrity of the information within a high-tech environment. The data structure is said to make an irreversible timeline of the data, and once the block in the chain gets filled, it gets in the part of that timeline, whereas every block gives out an exact timestamp when it joins the chain. In fact, every user is given an alphanumeric ID number to keep track of their transaction process.
Types of blockchain network
Generally, numerous blockchains are developing every time, but if we count, there are 10,000 working cryptocurrencies based on the blockchains besides the non-active ones.
But when it comes to the network, blockchain has four network management categorized as,
- Public blockchain
This type of blockchain does not consist of any restrictions and is open and accessible to everyone. Anyone can easily appeal or authorize the transaction, and the public blockchain uses proof of work consensus mechanics to provide better functioning. Examples of a public blockchain are Ethereum and Bitcoin blockchain.
Although the system has some disadvantages too,
- Need computation power
- No confidentiality for transacting
- Low degree of security
- Private blockchain
Opposite the public blockchain, the private blockchain is not open and has restrictions. While it has a similarly distributed peer-to-peer network as of public blockchain yet, it is controlled by the organization that maintains a shared ledger that works in a centralized way. A typical example of private blockchain is hyper-ledger. The private blockchain application is spectacular because it boosts up the trust factor of the users and could run behind the business firewall or could get hosted on-premises.
This type of blockchain runs parallel to the main chain and allows users to shift their network assets from one blockchain to another with smooth navigation and scalability. A typical example of such a sidechain is a liquid network.
- Consortium or hybrid blockchains
Connecting public and private blockchain shares blockchain maintenance with its centralized and decentralized faculties. Multiple organizations handle the network, determining whom to give access to and whom to not. A typical example of such a network is Dragonchain and energy web foundation.
Importance of starting with blockchain
Invented by Stuart Haber and W. Scott Stornetta in 1991, blockchain has become a digital change that brings a handful of productivity and enhancement when applied to business management. Similarly, exchanging value also has transformed, and now it is an entirely digitally certified and credible source for managing cryptocurrency.
When it comes to the upholding of business with scalability, accuracy, efficiency, and transparency, blockchain plays its part very fascinatingly. It delivers immediately shared information with utmost sheerness stored in the immutable ledger, which is accessed by a user who is included in the permissioned network member. Moreover, the blockchain gives all the required details in terms of track order, payments, account, and so much more of the transaction history without any vagueness. It actually bequeaths the user a set of credible confidence with end-to-end proficiencies.
With the critical essentialities saturated in the blockchain, it has gained wide acceptance from the audience.
- DLT – the distributed ledger technology performs to differentiate the blockchain database from a typical database. It consists of a shared ledger that is accessible to everyone and where the immutable transactional records are shared and get recorded once without any duplication.
- Smart contracts – this is one of the striking elements in the blockchain. Smart contracts are basically a set of rules that helps in speeding up the transaction with its intelligent conditions. This feature is stored on the blockchain and is automatically executed when required.
- Immutable records – the transaction records cannot be edited by anyone once they get accommodated into the shared ledger. Also, if an error occurs in the transaction record, the new transaction must be made to reverse the mistake. What you find is that blockchain technology makes it clearly visible to the user what changes have been made in the transaction records.
Advantages in using blockchain network
Blockchain technology marks the emergence of innovation and high advancement; it is evident that the system consists of loads of advantages which makes it so. Although the benefits are tons, we mark only a few important ones.
- Cost-efficient – blockchain technology aids in bringing cost-efficient programming because the third party verifications get eliminated. This is because the user doesn’t have to pay the bank for the confirmation of documents or transactions.
- Accurate technology – as there is no human involvement, the chances of error becomes less, and hence the user gets correct transaction records. Somehow if the transaction record got some computational error, it occurs only to one copy. Therefore other forms remain accurate because thousands approve the network transaction of computer networks.
- Smooth and productive transactions – blockchain helps attain the transaction process within 10 minutes compared to the traditional banking transaction process, which takes almost a week or so. Programming under blockchain technology is the secure way to cross border trade within a limited time zone. The transaction network is confidential because the transaction record does not reveal personal identity.
- Transparent – the blockchain is an open platform that is accessible to anyone. Being an acceptable software source, any user can view the track record or make improvement suggestions to it. In fact, every type of change done is visible to the user.
- On spot trust and security – the transaction records never get tampered with because of the consensus mechanism the data holds. Every data consists of the cryptographic key, which is different from one another and whatever record is made is stored permanently. Whereas the blockchain is immutable and is from peer to peer, thus only trusted transactions are performed, which cannot be undone or altered by the organization or users. The transaction is shared only with the network members who have specially granted access.
- Decentralization – blockchain works within the transaction records copied and distributed among multiple networks. Any kind of change that happens in the network gets updated on every computer network. Also, sharing the transaction record to different networks aids in bringing a secured program that cannot be hacked so easily. And if it gets hacked, only the single copy gets compromised; the rest remains unaffected.
Drawbacks connected to blockchain network
Blockchain is very beneficial in terms of giving a wide variety of features; still, some hazards cannot be ignored when looking for the operation of blockchain technology.
- Blockchain technology consumes a lot of electricity to perform transaction processes. Although the electricity consumption is less than that of the traditional banking system, energy is finished, and it affects the environment no matter what. This way hampers the environmental impact to a greater extent, especially when it is bitcoin.
- Bitcoin and blockchain transactions using a lot of computational power and electricity give rise to another problem. The high electricity bill actually pins the user to pay more alongside encountering the speed inefficiencies. But on one side, mining bitcoin rewards the user by making their time and energy worth it. On the other hand, when it comes to using blockchain without cryptocurrency, miners have to pay more for the technology.
- Although investing in cryptocurrency is an ideal option, storing it in the crypto wallet seems a digitally appropriate option. But if not maintained properly, this wallet may prove disadvantageous to the user. Somehow, if the user forgets the seed phrases or the list of words that give access to the wallet, all your money is gone forever.
- There are cases when the cryptocurrency is used for attaining illegal activities within the blockchain network. The dark web actually performs this unlawful activity of trading goods and cryptocurrency, making an illegal purchase. The very recent dark web blockchain illegal activity is silk road which the FBI shut down in October 2013.
Although there are different solutions applied to various problems that make the blockchain technology worth consideration and release productivity growth in the blockchain system. Moreover, the emergence of Metaverse made from AR, VR, mixed web, and blockchain technology has elevated the usage of blockchain technology at the most.
There is more to come within blockchain technology, but for now, it is very sure that this advancement is like a golden pace for many business industries.