If you are active in the world of investing and are familiar with terms like bitcoin and cryptocurrency, you must have heard of the word ‘blockchain‘. Since blockchain is a comparatively new term that most people are not fully aware of, there is a lot of speculation regarding what it means.
Here, are the 10 things you must know about blockchain!
1.Meaning of Blockchain:
Simply put, blockchain is a database that can hold massive amounts of data associated with transactions and other kinds of information. However, it is quite different from other kinds of data storage services available electronically.
2.Blockchain is a decentralized database:
Blockchain is a semi-public database with no central authority. This technology stores data in linear containers called blocks which form a chain. The fact that somebody has added data to the chain is visible to all. However, the key to unlocking the block remains with the user.
3.Blockchain is a distributed ledger:
Since blockchain is a semi-public database, it is like a distributed ledger where multiple people have access to the recorded data. Moreover, every transaction added to a blockchain can be traced and verified. Therefore, the problems of double counting or fraudulent transactions are absent.
4.Blockchain operates in a peer-to-peer network
The blockchain is not controlled by any central authority. That is why it forms a peer-to-peer network where any computer connected to the network can add transactions and verify them.
5.The working of a Blockchain
When two parties enter into a transaction using blockchain, all the computers or nodes connected to the network receive information about the same. Next the transaction receives validation. Once verification is complete, the transaction is added to a block and hashed according to the hash of the last added block. The hash determines the position of the block in the chain. After that, the new data block is permanently added to the blockchain. The transaction is then deemed complete.
Thus, blockchain acts as a huge data center for securing transactions. However, to make the best use of it, businesses need to have flash storage that supports a stable and fast storage architecture.
6.Blockchains can be private too
There are two kinds of blockchains- a private (centralized) blockchain and a public (decentralized blockchain). Unlike a public blockchain, everybody cannot see all the transactions in a private one. Here, only certain members have permission to view the data.
7.Impact of Blockchain on Banking
Blockchain technology has already disrupted the global banking and financial sector to a large extent. It is believed that the impact will be stronger in the upcoming years. This is because blockchain technology can result in cost savings for banks. According to Forbes, banks can save 12 billion dollars annually if they start using this technology.
8.Impact of Blockchain on Jobs
Blockchain helps in reducing costs by eliminating intermediaries. It enables people to complete transactions directly without the need for third parties like banks and brokers. Therefore, it is predicted that acceptance of blockchain on a wider level can lead to the extinction of a variety of jobs. But at the same time, new kinds of jobs will emerge.
9.Use of Blockchain technology
The use of blockchain technology extends beyond digital currencies like Bitcoin. It is applicable in numerous enterprises belonging to different industries. For instance, blockchain technology is being used to maintain health records and for diamond certification.
10.The future of Blockchain
Many companies are investing millions in the network and infrastructure of this technology. This is because blockchain is perceived to be a revolutionary technology not only in ICT but in every field.
Last modified: May 9, 2021