What Does the Term ‘Blockchain’ Refer To?
Blockchain is a system designed to record information in a specific way that makes it almost impossible to hack or change. A blockchain can be described as a digital ledger where transactions are recorded. These transactions are duplicated and distributed across an established network of computer systems. Such technology is typically associated with cryptocurrencies, like Bitcoin.
- 1 What Does the Term ‘Blockchain’ Refer To?
- 1.1 What Is the Storage Structure of Blockchain?
- 1.2 Transparency of Blockchain Technology
- 1.3 The Security of Blockchain
- 1.4 How is Blockchain Technology Used?
- 1.5 Blockchain Used in Voting
- 1.6 Blockchain Used in Supply Chain
- 1.7 Blockchain Used in Smart Contracts
- 1.8 Blockchain Used in Healthcare
- 1.9 Blockchain Used in Property Records
- 1.10 What Are the Advantages of Blockchain Technology?
What Is the Storage Structure of Blockchain?
Every block in this chain consists of numerous transactions. When a new action takes place on the blockchain, a record of such transaction is added to each contributor’s ledger.
The decentralized database that’s responsible for managing these contributors is known as Distributed Ledger Technology (or DLT). Blockchain is one form of DLT and is designed to include an immutable cryptographic signature (known as hash) when recording transactions.
An indication of tampering would be if a block in a chain was changed. The design of this technology entails that hackers are required to edit each block in a chain across all distributed versions if they wish to corrupt such blockchain system. Blockchains like Ethereum and Bitcoin are continually growing as more blocks are being added to the chain. Thus, significantly increasing the security of a ledger.
Transparency of Blockchain Technology
This technology is decentralized, meaning singular entity controls this blockchain, as its ledgers are spread across several computer servers around the world. Thus, all transactions can be accessed with a personal key or by using blockchain explorers, which allows all individuals to view all transactions happening in real-time.
Every node has its own copy of this chain that’s updated as these fresh blocks are verified and added to the chain. The benefit of this transparency is that every transaction can be easily traced, even if the individual is entirely anonymous. Such transparency is one element in blockchain technology that helps reduce fraud.
The Security of Blockchain
Blockchain technology is engineered to address issues in trust and security in numerous ways. New blocks are stored chronologically and linearly. Meaning, these blocks are added to the ‘end’ of the chain. Once this block is added, it’s difficult to return to the same block and alter its contents unless the majority reaches a consensus to do so.
This feature is available through the incorporation of unique hash codes for each. These codes are created by a math function used to turn digital data into a string of letters and numbers. The hash code changes when information on a block is edited in any way.
An example of where this security process is useful is if a hacker wishes to alter the blockchain and steal Bitcoin from legitimate owners. Altering the single copy is no longer going to align with the copy of everyone else in the distributed chain. Thus, this copy is going to stand out when everyone cross-references their blocks, casting away this hacker’s copy as illegitimate.
A hacker is required to simultaneously control and alter at least 51 percent of the copies present on a blockchain to be successful in an attack. This is almost impossible because of the size of Bitcoin blockchain and how fast it’s growing.
How is Blockchain Technology Used?
The blocks added to a chain are used to store information about monetary transactions. However, this blockchain technology can also be used to store data about other types of transactions. Some of the numerous sectors where blockchain is useful include healthcare, property records, voting, supply chains, and smart contracts.
Blockchain Used in Voting
Blockchain can be used to enhance the performance of modern voting systems. Utilizing blockchain for voting can potentially eliminate election fraud while boosting voter turnout. This is because it makes it almost impossible for these votes to be tampered with. Additionally, the need for massive personnel is reduced when conducting an election, as results are nearly instant.
Blockchain Used in Supply Chain
Suppliers can utilize blockchain technology to record the origins of specific materials they are buying and re-selling. Thus, allowing companies to verify the authenticity of such goods. This allows the food industry to track the goods and record the journey from farmer to consumer.
Blockchain Used in Smart Contracts
A smart contract can be described as a computer code that’s implemented into the blockchain to verify, negotiate, or facilitate the terms of a contract agreement. These contracts operate under a list of rules or conditions that respective users have agreed upon. Thus, the terms of this agreement are automatically upheld when these specific conditions are met after implementing blockchain technology.
Blockchain Used in Healthcare
Healthcare providers can utilize blockchain technology by securely storing their patients’ medical records. This offers patients the surety that records can’t change when a medical record is created, signed, and written into the blockchain. Privacy can also be offered by encoding and storing personal health records on the blockchain. A private key can be applied, so only authorized individuals can access this information.
Blockchain Used in Property Records
The process of recording property rights is inefficient and time-consuming. All of these documents are recorded manually into the county’s central database and public index. Such procedures make tracking property ownership and dealing with disputes less efficient and inaccurate.
However, blockchain offers the potential to eliminate scanning documents and tracking physical files present in a local recording office. Owners can trust that their deed is permanently recorded and accurate if such property ownership is verified on a blockchain.
What Are the Advantages of Blockchain Technology?
Blockchain technology can potentially offer individuals enhanced user privacy, lowering processing fees, fewer errors, and heightened security. When using this technology, individuals gain improved accuracy. This is because human involvement is removed during the verification process.
Additionally, cost reductions are presented because third-party verification is eliminated while decentralization offered in this technology makes it more difficult to tamper with. From here, transactions are more efficient, private, and secure. Finally, blockchain offers an alternative banking method to secure personal information for citizens of nations with underdeveloped and unstable governments.