According to an estimate, the cryptocurrency market valuation is poised to hit $1 trillion. The underlying technology that is fuelling this market is called
blockchain.
It is undeniably the biggest invention of the 21st century — the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. Since
then, it has transformed into some bigger and the main question on everyone’s mind is — What is Blockchain?
Blockchain technology has become instrumental in creating a new version of the internet by allowing digital information to be distributed but not copied. It
was originally developed for the cryptocurrency Bitcoin but now it has expanded into many industries.
With the meteoric rise of the Bitcoin price, many cryptocurrencies like Ethereum (ETH) and Ripple (XRP) have come up using the blockchain technology.
What is blockchain technology?
The blockchain is a decentralized ledger of all transactions across a peer-to-peer (P2P) network. Using this technology, participants can confirm transactions without the need for a central certifying authority. Potential applications include fund transfers, settling trades, voting and many other uses.
This is how it works
When someone requests a transaction, it is broadcasted to a P2P network consisting of computers known as nodes. The network of nodes validates the transaction and the user’s status using known algorithms. A verified transaction can involve cryptocurrency, contracts, records or other information.
Once verified, the transaction is combined with other transactions to create a new block of data for the ledger. The new block is then added to the existing blockchain, in a way that is permanent and unalterable. The transaction is then deemed to be complete.
The benefits of blockchain technology Greater Transparency
It increases the transparency to enterprise transactions as it is a distributed ledger. If any single member of the network tries to alter a block then everyone else in the chain can see where the change has happened and decided whether it is legitimate or not. To change a single transaction over blockchain, all subsequent records will require alteration thus making the data more accurate as well as transparent.
Increased Security
Blockchain enhances the security of a transaction compared to other record- keeping processes. Once the transactions have been approved they are encrypted and chained together and then recorded across a network of computers making it less likable to get hacked or modified easily. This helps to prevent any type of fraud or unauthorized access to critical data.
Improved tracking system
Dealing with complex supply chain procedures makes tracing a product difficult. In case of exchange of goods and services, blockchain helps to eliminate complexities and accelerates accurate traceability of the entire journey of the product thus verifying the authenticity and preventing fraud.
Higher speed and efficiency
Blockchain helps to streamline as well as automate the conventional enterprise processes thus eliminating human errors and increasing the speed and efficiency of the process. With the decentralization of the records, everyone has access to the same information, thus building stronger trust without numerous intermediaries.
Conclusion
Some say ‘ignorance is bliss’ but not in this case. By gaining a basic understanding of blockchain technology, you will be able to make better informed decisions when investing in crypto assets and also, we cannot ignore the applications of this technology in various industries.
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Topic: A Basic Guide to Blockchain Technology (Read 38 times)
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