If you are using the internet and have a smartphone you would have heard of Blockchain or Meta (, of course, ) by now, I can bet 100 INR (Why so low? Never Mind, you get the point). The hottest topic of the decade has its heat hotter than the sun.
So let's look at what Blockchain is all about?
What is Blockchain?
In its simplest form, think of it as a lot of interconnected systems(like a network) where all the information is stored in each and every system.
- Each of these systems is called a "node".
- Any change in the information stored can be termed as "transaction".
Because of this, it is also called a Decentralised network.
How do Blockchain works?
In simplest terms blockchain works on fixed contracts just like legal documents called smart contracts. These are smart as they execute lightning-fast if conditions are met and wouldn't budge if any criteria is missed. Note : "Both the parties involved are willing to do the transaction" is not the only criteria here.
Now in a blockchain much like in any field a "Ledger" is maintained digitally. This ledger contains all the transactions that have ever happened around the globe and is available with each node. Today most of the ledgers are maintained by Banks and other large private institutions and are not at all transparent.
Transactions have to be submitted to this digital ledger first. This can be done by the users using their public address keys and its associated private key. Think of public key as email address and private key as the password to that email address. The private key acts as the digital signature to validate the transaction in the blockchain which adds the extra layer of authentication for security. For a transaction to be valid, the digital signature must be correct and the public key must have sufficient funds to cover the transaction.
As each transaction results in a change in the ledger of all the nodes around the globe at the same time, the transactions are first made into blocks and validated with the smart contracts before getting executed which adds another layer of authentication making it highly impossible to make malicious changes to the ledger.
Once this block of transactions is confirmed it is added to the ledger which makes it ever-growing. Nodes are rewarded for their services with a transaction fee every time this thing happens.
So now that we know what a blockchain really is and how it functions, let's look at some of its advantages.
Advantages of Blockchain
"Security" – As each node is uniquely identifiable and the information in each of these has to be the same at all times, consider it tamperproof.
"Immutability" – Once a transaction is done it is very hard to undo it as it will require you to alter that transaction in each node which can't be done.
"Reliability" – Blockchains have globally distributed networks with 24/7 uptime. They are always online and are not restricted geographically or politically.
"Peer-to-Peer" – The parties involved in a transaction have to be connected to each other otherwise transaction will not go through.
hoosh.....!!!!!! pretty intense right???? let's get to some fun stuff.
Why use Blockchain?
I get it, it's a new technology and it's cool and all, but why is it needed? Aren't banks considered safe by most people? They have vaults and lockers right??? Well, right and also wrong.
You see in today's world whenever a transaction happens between a buyer and a seller it doesn't happen to keep each other's best interests at heart, it happens solely as a means of profit-making and also the transactions are private between the two parties involved so nobody can know if the ongoing transaction is legal or illegal until it's too late. No transparency whatsoever can lead to Ponzi Schemes.
There are many other problems involved with the current banks and transactions market which always results in some type of fraud and eventually loss of money and in turn decreasing its purchasing power. This is where blockchain technology comes to the rescue by Decentralised Finance(a.k.a Defi). It deserves a whole another blog. For now, let's carry on with our discussion.
So is blockchain is all about bringing a revolution in finance, some might ask.
The answer is No, not at all. Let's see
By applying transparency and smart contracts, the insurance products are being disrupted to provide insurance to the people which actually helps the needed.
These are just some arenas where blockchain has started to disrupt the industry standards in the present market. But much likely soon it will just take over anything that comes in its path.
Where to start?
Still craving to know more about Blockchain and its associated technologies. I have prepared a list for both coders and non-coders below. Do check it out.
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This is my first research blog on this topic. If you liked it please comment with your suggestions and feedback. It means a lot to me. Subscribe to my Newsletter for more blogs like this, I am free anyways will be uploading regularly(Jus Kidding, I'm a very busy guy(Jus kidding)).
Pk, signing off.