Blockchains 101- what exactly do we need to know?

We all have heard about crypto currencies, NFTs, Bitcoin and such words generally when it comes to banking, investing since the past ten years. While it might be confusing and complicated, the technology behind it- “blockchain technology”, is what we need to understand.

Blockchain is one of the leading technologies and is becoming vital in the digital world. In the times when every information is shared online, through various platforms, the faster and safer it reaches the recipient, the more accurate and reliable it becomes!

Businesses run on information; this is where the famous “blockchain” steps in.

So, what exactly is blockchain?

Blockchain is the system which records information without it being open to any harm like cheat, hack or change in the system. Blockchain ensures the safety of any information that has been passed to in the network or system.

Essentially, it is just a digital ledger which is also decentralized, therefore- unlike any other systems, no governmental authorities can interfere or control it.

This digital ledger is spread across a network of computer systems on the blockchain. As the name suggests- the blocks in this chain contains transactions. This is recorded and every block is connected to each other, forming a chain. Since every block’s transaction is recorded and connected to the previous block in the chain, any changes made to any block, would never go unnoticed. This ensures security and trust of the user, since it is impossible to hack and cheat into the system to steal any kind of information.

How does this make blockchain important?

This very sense of security, has attracted the young minds and they are very keen on using this technology to its very core. While in the past it has been tough to create any kind of digital currency which would be ‘safe’ to use, blockchain is that one technology that we can depend on without worrying about our transactions getting tampered or stolen.

The three reasons why blockchain is now vital and is also an emerging technology in the digital world are-

·         Highly secure- because of the block’s connection, no tampering or changes go unnoticed, making our information super safe and secured.

·         Automation capability- it is a programmable technology, and works wen certain triggers are met.

·         Decentralized system- since no other authority except the two users are involved in the information transaction, the transaction is super smooth and fast, exactly what businesses need today!

 

So, are there no cons?

There are, mainly the regulations and low transaction rate as well as the history of use in illicit activities.

The mining of bitcoin’s technology cost is way more and would lead to some financial errors due to the instability.

 

What else do we need to know?

Other than the pros and cons- there are certain types of blockchain networks based on the type of system required. for example, for crypto currencies, a public network is used. In private network blockchain, a company can use it to pass information in crypted form so as to prevent any information leak.

Another type is a permissioned network where any network whether private or public requires an invitation or permission to join it in the first place. This is used for extra security and safety.

Is that all it is to a blockchain technology?

Conclusively, blockchain technology can be used for more than just cryptocurrencies. Judging by the success of blockchain, not just cryptocurrencies, this technology is going to be used widely to ensure the information passage is strong and safe, and also faster than ever.

There is much more to this technology, the way transactions work, the rules after being a part of a blockchain network and also how this technology would soon be one of the most reliable and ruling technology in the digital world.

Article by- Garima Gaur

Article sources- ibm, pwc, simplilearn