Blockchain is a new well-promising phenomenon in investing, banking, and cryptocurrency industries. Still, if you work in the mentioned spheres, this is not a completely new issue for you. Moreover, this advanced record-keeping technology behind bitcoin has become really important for modern players these days. Even with a complex name, blockchain remains quite understandable technology. Furthermore, if you need to use it in your work, you can first check its advantages for your business in order to use it in full.
What is Blockchain?
Blockchain is a technology that brings new possibilities for cryptocurrency expansion and the development of new advanced methods of transactions. In fact, blockchain remains a chain of blocks, thus it is a public database (the chain) that contains digital information (the block).
Since blockchain contains a bunch of digital pieces of important information, it particularly covers the following info:
- The detailed information about transactions (date, amount of money, certain purchase paid);
- The participants of the transaction (the name of a buyer and the name of a seller);
- Personal identifying information revealed in unique codes called “hash” (the data that allows distinguishing your payment from other ones).
The “blocks” in blockchain technology can cover more than a single operation since they can contain up to 1 MB of data. Therefore, a single “block” can cover a bunch of transactions depending on the exact size of the mentioned transactions.
Blockchain: How It Works
Blockchain is a special technology that operates according to a simple mechanism. The blockchain gains new data when it is added to a block. As a result, blockchain operates according to its structure that remains multiple blocks joined together.
In the same time, the blocks must follow a few requirements to be added to the blockchain:
- It is added after the transaction is completed, as a result, the information will be included to the block after purchase proceeds.
- The transaction should be verified. The united network of computers operates as the main verifier once checking the occurred transaction. It verifies every detail of a transaction, including the amount of money, time, and participants.
- The transaction should be stored in a block. After the transaction is checked, it takes a few seconds to verify the seller and buyer’s signatures and store the transaction into a block.
- The block must get a unique code “hash”. The transaction must be verified in order to be given a unique code. After the transaction gets its “hash”, it is fully-added to the blockchain.
- Once being added to the blockchain, the transaction becomes openly available for anyone who wants to view it. The Bitcoin’s blockchain offers access to every detail of the completed transaction, including date, time, etc.
Blockchain: Privacy and Security
Blockchain allows access to information about transactions for every person who wants to check the completed transactions. At the same time, you can add your personal computer to the blockchain network to receive constant updates of your blockchain (in particular, copies of the blockchain).
Once getting a copy of the blockchain, you get both unique and duplicate information. In addition, every user in the network gets his own copy of the blockchain. It means that reaching and manipulating with blockchain gets really difficult because hackers need to deal with a limitless amount of copies.
At the same time, you cannot get information about the customers who make transactions. Therefore, the entire information you can see about a user is his username and signature. Since the blocks are added to the blockchain in chronological order, it gets really difficult to alter the previous content.
What is more, since every block holds hash codes that remain unique codes produced by math function, it makes hacking of the blockchain a really problematic business. Actually, every hacker who wants to change hash codes needs to deal with each and every code in the chain. As a result, it is almost impossible to edit or delete a block or hash codes in the blockchain.
Blockchain vs. Bitcoin
Blockchain was created in order to record, store, and distribute digital information. It does not allow editing information.
Since the first app based on blockchain technology was launched in 2006, blockchain technology has brought a new approach to digital information storage. In fact, the Bitcoin protocol is built on the blockchain. Consequently, Bitcoin currency and its use represent the way the blockchain works.
In particular, when the owner of Bitcoin wants to spend it on groceries, the transaction will be confirmed by a network of computers. Consequently, when one person purchases something from another person and pays with Bitcoin, the transaction is verified by the network. Both participants use special programs on computers. Once the transaction is verified and got its hash code, the completed transaction is recorded to the blockchain and stored. Even when blockchain allows access to blockchain information, it is impossible to generate a private key and withdraw money. For that reason, blockchain technology remains an advanced and confidential one.
Blockchain: How and Where to Use
Blockchain application is created in order to store and distribute data about numerous monetary transactions. At the same time, it can be used to store data about other types of transactions. It also can be used to store data related to exchanges, votes of candidates, etc. The recent surveys show that over 34% of modern companies use blockchain technology and 41% expect to use it in the nearest future. Actually, the blockchain application can be used in a wide variety of industries.
The bank industry is the exact sphere where blockchain can bring the biggest benefits. It improves the quality and speed of financial operations. Since most of the financial institutions work five days a week, when you tend to make a deposit on Friday evening, your transaction will not be completed as it needs time to be verified. Blockchain is the exact technology that works round-the-clock. The innovative Blockchain technology allows completing transactions in about 10 minutes no matter of time and day of a week. Additionally, technology assures an improved exchange between institutions. Blockchain-based applications also allow decreasing banking and insurance fees.
Cryptocurrency and Blockchain
Since the Bitcoin protocol is built on the blockchain, the technology assures the transactions provided in Bitcoin. The Bitcoin is the exact cryptocurrency that decreases numerous banking risks. There is no need for a central authority when you operate using blockchain technology. Therefore, cryptocurrencies reduce numerous risks and eliminate many insurance fees. It also brings a wider network of individuals that conduct its business using advanced blockchain technology.
Blockchain allows assuring the security of medical protocols. In addition, the data recorded and stored with blockchain cannon be changed, thus patients get additional proof of data safety. It is also possible to assure improved privacy of personal data once using private keys.
Property Records and Smart Contracts
Blockchain can be used to accurately store property records. The technology allows skipping scanning of documents and checking of physical files once recording and verifying property ownership automatically.
A smart contract is a special computer code that can be inserted into the blockchain in order to simplify and verify a contract agreement. It is easy to carry out the terms of agreements automatically once using blockchain technology.
Uses in Political Voting
The blockchain technology can be used even in voting. Accordingly, every vote gets stored and verified as a block in the blockchain. Further, the votes are calculated without any need to use additional help. Since it is impossible to change the blocks, the technology assures full transparency of a voting process.
Blockchain: Advantages and Disadvantages
The blockchain technology allows improving numerous spheres of people’s activity, especially the banking sphere, and the financial industry. It also allows for lowering various fees and avoiding numerous errors. The blockchain technology assures better security and privacy as well.
- Improved transparency;
- Improved accuracy with automatic verification;
- Fees reducing;
- Improved security and privacy.
- Huge technology cost;
- Low transactions per second;
- Possibility of being hacked.
The blockchain assured an improved accuracy of the chain. Since the transactions are verified by a network of computers, technology eliminates possible errors and removes any human involvement. Finally, it assures more accurate information recorded. Moreover, blockchain reduces costs needed previously to verify the transaction in the bank. Since blockchain assures a decentralization, it becomes more difficult to hack as it operates through a secured network of computers.
The blockchain technology assures fast and accurate transactions letting users make all the needed transactions whenever they need it. In addition, it also greatly improves the privacy of personal data, especially when you use a private key. The transparency of transactions is similarly assured with the advanced blockchain technology use. If you need to get more information about the advanced custom software development based on Blockchain technology and check other secrets of successful online business, feel free to reach JatApp.