Bitcoin, the new kid on the block, has brought with it technology that has the potential to revolutionise the digital world. We’ve often talked about the Blockchain. In essence, it is a public ledger that holds information related to all Bitcoin transactions. It eliminates the need for data to be held centrally, which gives rise to a number of benefits. Who invented it? Well, we have an anonymous entity called Satoshi Nakamoto to thank for that!
To put it simply, Bitcoins are cryptocurrencies that one can use to make transactions online. These dealings are made anonymously, without the presence of middle-men, that is, no banks or other third parties. And the best part? Anyone involved in the network has a copy of all the transactions and can verify the same. Owning a bitcoin is like owning an actual gold coin, as its price fluctuates in a similar manner. You can use Bitcoins to buy goods or services online, or keep them and wait it out for their price to increase. Due to the computational-intensive nature of the formation of a Bitcoin, it is virtually immune to forgery.
For more information on Bitcoins, check out- “10 commonly used Bitcoin terms explained”
What’s a blockchain?
One of the best things about blockchain is that just like the Internet, you don’t really need to know the technical nitty-gritty in order to use it. A blockchain is like a spreadsheet which maintains a record of transactions made via cryptocurrencies. As more and more dealings are made, they get added to the chain in the form of a ‘block’. This data is decentralized, meaning anyone with access to the Internet can verify these records, but cannot modify or corrupt them. A network of computers, that is, different nodes, are involved in the blockchain. Every node receives a copy of the blockchain. Whenever a new transaction is carried out, the blockchain is updated across the millions of nodes around the world.
Is Blockchain safe to use?
As a matter of fact, the blockchain is highly secure. All the blocks in the chain are linked to one another. This means that an attempt to tamper with the data in one block would require one to change the data in all the other ones linked to it. Additionally, the security measure used by blockchains is called public-key cryptography. According to it, every record that is written on a blockchain ledger has a unique key associated with it. This keeps the data protected.
The Reach of Blockchain
It is said that the Blockchain is the next big leap in technology for us since the internet. It has spread its roots into the crevices of many different organisations in the world and continues to do so. Other than finance, Blockchain has endless applications in many different sectors. Some of them include:
Blockchain in IoT
Blockchain technology has an ever-increasing presence in the field of Internet of Things or IoT. Tracking goods, analysis of data, and mass-scale automation are just some of the applications in this regard.
‘Smart’ Contracts
Certain aspects of a pre-programmed contract can be executed when certain conditions are met. For example, when there is a binding contract between two parties, funds can be released if and when required according to pre-defined terms. This makes the system more efficient and reliable, as one does not have to depend on a third party endorser. An open source project called Ethereum was created to support this application.
Digital Identity
What if you could throw caution to the wind when it comes to protecting your digital identity? Conventional systems require the traditional username/password approach to log in. But the data that is stored on such systems are vulnerable to hacking and identity fraud. The authentication system in Blockchain technology uses digital signatures based on public-key cryptography for identity verification. This is definitely more secure than the former approach. A startup called Netki is working on creating an SSL standard for the blockchain.
Blockchain in Governance
When it comes to voting, transparency of the process and voter anonymity are of prime importance. Blockchain has the potential to assure just this. In the year 2014, the Liberal Alliance, a political party in Denmark, was one of the first to adopt Blockchain in its voting process.
Wrapping up
- Bitcoins are cryptocurrencies that are increasingly being used to purchase goods and services online.
- Blockchains are a shared public ledgers which hold the records of all the digital transactions that are made.
- Security is ensured in blockchains via public-key cryptography.
- Applications of blockchain include, but are not limited to enhancing of systems in IoT, increasing transparency of voting systems, enforcing smart contracts, and protection of digital identity.
All in all, the Blockchain is transforming the digital world, making it a safer, more efficient and transparent place.
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