There are a lot of speculations and a large amount of guesswork around the concept of Blockchain Technology. As crypto currencies are on the rise, the questions surrounding them also increase.
So what is a Blockchain?
As the name suggests it is a continuous chain of records, called blocks that are linked together. This link is secured and chains all the blocks together with a hash function. It is effectively a database, but it does not have a central governing authority.
In the traditional course of internet usage, for transactions like in the banking networks, everything is based on the client-server network model where there is always a centralized authority that controls the database. To perform any kind of update, one person is locked out for the other to perform updates on a record. For example, to maintain balances or make a transfer, the banks’ system briefly locks the access, makes the transfer and then updates the other side. After all this is done, the access is re-opened. There are a few designated persons who have access to this data. The general public cannot view this data. They can only view their own account details at the most.
In the Blockchain network, there is no central authority as data is not stored in a single location. There is a public ledger (digital file) which keeps track of all the transactions, and to retain it, there is a large network of computers (nodes) as opposed to one central entity as is the case with banks. There is no one person or authority that has the entire access and as it is public everyone can see it. Being distributed across the world makes it even more difficult to be meddled with. Each node in the network will have a copy of the ledger file. The network collectively adheres to a protocol to validate new blocks that are added to the chain.
Let’s say, John wants to give my friend Jane some bitcoins. The first thing I will do is broadcast this to the network. The message will tell the network that John’s account should reduce and Jane’s should increase by x BTC. Each and every node in the network receives this message. It will then update their copy of the ledger with the requested amount there by successfully achieving the transaction.
So to summarise,
- There is no central authority so there is no “trust” factor. The only thing there to trust are the mathematical functions and code that enables these transactions seamlessly.
- In our traditional systems, we are able to view only our account details whereas in the blockchain network everyone is able to see everyone else’s transactions.
- If something goes wrong, there is no helpdesk support like our traditional systems nor can we hold any one accountable.
Is Bitcoin and Blockchain the same thing?
The Bitcoin is a crypto currency. It is decentralised so no single authority controls it. It is held electronically either in your PC or in a virtual wallet. The bitcoin also called “digital gold” is valued at close to $9 billion US. The bitcoin uses the blockchain network for transactions.
The Blockchain, to put it simply is a database. The Blockchain was an innovation in itself but was primarily used to make the bitcoin transactions transparent and permanent. The blockchain basically gave a way to bypass any middle man or an institution like SWIFT without compromising on safety combined with low costs and speed. Due to these advantages, the Blockchain may have other users also apart from the crypto currencies.
The future of Blockchain…
It is becoming increasingly difficult to ignore the fact that use of blockchain technology is on the rise. More and more banks and financial institutions are adopting this technology. The opportunities in the field of blockchain technology are in abundance, and it’s just the beginning. Investors are keen and are constantly eyeing this space. There are already a number of companies trading in blockchain technology stock, 360 Blockchain, BTCS, BTL group, DigitalX, Global Blockchain Technologies and Marathon Patent Group to name a few.
The year 2017 has been a remarkable year for crypto currencies and there are many companies in the blockchain industry apart from bitcoin which are performing very well. The major ones in the race are:
- Ethereum: This is a decentralized platform that helps make agreements that are executed without any human intervention. This project was launched in 2015 by Former Vice President of Amazon, Jeffery Wilcke and Vitalik Buterin. It comes in third after Bitcoin and Ripple among all the currencies.
- Ripple: It is devoted to money transferring and works on guaranteeing real-time transactions between banks. Over 75 banks from all over the world are implementing and testing the technology. Started in October 2012, by former Senior Vice President at Yahoo!, Brad Garlinghouse and Stefan Thomas.
- Coinbase: Brian Armstrong and Fred Ehrsam launched this company in July 2011. It is one of the top platforms for digital currency exchange and digital currency wallet.
- IOTA: IOTA specializes in the Internet of Things. It is basically an open source distributed ledger. This system is stable despite of the number of transactions and has no transaction fee and also low confirmation time. It was launched by David Sonstebo and Dominic Schiener.
- OmiseGo: OmiseGo was founded in June 2017 by Jun Hasewaga and Donnie Harinsut. It provides a decentralised financial technology for payment services.
There are also a number of Indian start-ups focussing on Blockchain Technology. Some of the names are CoinSecure, EzyRemit, KrypC, MindDeft Technologies, Sofocle.
What will happen to the World Wide Web as we know it and what the future holds for the internet are some of the questions that may be answered as this technology spreads its wings.
This article is contributed by Janhavi Gokhale
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