What is Blockchain Technology - Explained in layman terms
So, most probably you've already heard the term 'blockchain technology' here and there. But are you still clueless about what it is? Invented in 2008, Blockchain is relatively a new technology. However, it is already transforming several business sectors and industries to perform better. Whether you're working in the banking, health care, public services or any other sector, you're likely to experience the effect of blockchain soon enough yourself. This article hopes to enlighten you to understand - What is blockchain technology in simplest words as possible. After that, we’ll see about enterprise blockchain platforms that can help organizations to kick start the blockchain transformation easily.
Blockchain technology can solve a lot of business problems. But not all.
First, let’s learn about the main problems solved by blockchain technology. So that we’ll understand the relevance of it.
Problem 1: Data stored in a centralized server is vulnerable to security attacks. These days, even highly secure websites of Facebook, Yahoo, Banks, etc are getting hacked. Hackers are getting stronger and no web security measures are sufficient to fight them. When a hacker gains access to a server, they can manipulate the database for their benefit.
Problem 2: Centralized data storage is vulnerable to data tampering. Consider a simple example of a vehicle service center. If an employee gains access to the software that manages vehicle service details, they can alter the past service details of a car. This can affect the resale value of the car. In a nutshell, people with access can always tamper the past data if the data is kept in a centralized database.
Problem 3: In online transactions, there is a risk called ‘double spending’. That is, a person with technical knowledge can spend the same digital money more than once.
Problem 4: In a system consisting of people, entities that do not know each other, how can they trust each other? For example, consider a simple example of a group scientific research. Here, the individual researchers do not know each other and do not trust each other. How can each and everyone be sure that the data submitted by other researchers are genuine?
These problems are existent for a long time in many business sectors and industries. Fortunately, with the introduction and blockchain technology, these problems are no more an issue.
WHAT IS BLOCKCHAIN TECHNOLOGY?
Blockchain is a decentralized, distributed ledger existing on multiple computers at the same time. This ledger is continuously growing as new sets of ‘blocks’ are added to it. Each block contains a details of several transactions, timestamp and a link to the previous block, so they actually form a continuous chain. The ledger is not managed by any particular body; instead, every user in the network gets a copy of the whole ledger. Old blocks are preserved forever and new blocks are added to the ledger irreversibly, making it practically impossible to tamper data by faking documents, transactions and other information.
HOW DOES BLOCKCHAIN
HELP YOUR BUSINESS ?
The client was Dubai Land Department, a department set up by the government of Dubai to optimize land usage for economic and social development and plays an administrative role as the national land registration authority, managing land sales, leases and allocations.
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BLOCKCHAIN FAQ ?
Blockchain is not just a theoretical concept to begin with in the modern world. It is unquestionably, a disruptive technology that correspondingly changes the face of the whole business. In terms of functionality, blockchain is just a distributed public ledger that stores a growing list of records in a chain of blocks during a business transaction or data transfer. Blockchain technology is the most secure one because, every block of data is decentralized, transparent and immutable. Each change on a block significantly initiates the creation of a new block. Rather than overwriting the existing block. The chain of blocks allows to namely view each change separately. This makes the blockchain technology an anti-fraudulent one. Bitcoin is the most used practical application of blockchain technology. Bitcoin uses blockchain technology to handle monetary transactions but the real potential of blockchain is much more.
The three main pillars of blockchain technology are:
- Decentralization - Decentralization in blockchain means that it is not governed by a central authority, this makes the system more fair and secure. Here rather than depending on a central authority to perform a transaction or data transfer, blockchain uses consensus mechanism to record data across nodes of the network to actualize a transaction or data transfer in a secure & irrefutable way.
- Transparency - In general, blockchain provides a way to conceal the identity of a transaction block so that the public address of the block is extremely difficult to trace out. Another key point is the real meaning of transparency comes from the fact that each asset or data involved in the transaction is open to viewing. But only the creator of the block could perform such functions. In addition, this makes a blockchain both secure & transparent as a whole.
- Immutability - Immutability implies that any data or information that is once recorded in a blockchain could never be tampered with by any external means. Another key point is that a cryptographic method markedly conceals each stored data using crypto hashing function to keep it secure. The immutability nature of blockchain technology makes it a significantly relevant fit for banking transactions, patient record handling, land registry management systems and much more.
Hyperledger fabric is an undeniable standard for enterprise blockchain platforms. It is a collaborative effort of the Linux Foundation. It allows us to create one or more enterprise-level distributed ledger in a blockchain network to satisfy specific day to day business requirements.
Accordingly, the advantage of using Hyperledger fabric includes:
- Firstly, perfectly controlled network
- Secondly, concrete and secure transaction
- Thirdly, tailor-made blockchain technology architecture
- Fourthly, improved scalability and accountability
- Lastly, makes it easy to program and implement in all enterprise systems
There are exactly four different types of blockchain networks based on its usage:
- Public blockchain - Public blockchains have no restriction or control, anyone with network access could become the creator of a block (associate themselves with the consensus mechanism) to perform a transaction or data transfer. One of the most well known public blockchains are Ethereum, Bitcoin, Dash, Factom, etc.
- Private blockchain - Private blockchain focusses on a centralized blockchain network rather than a decentralized network. Enterprise businesses that run internal business operations using their own cryptocurrency make use of private blockchains. Here, the blockchain acts just like a distributed or shared database. Some well known private blockchains include Multichain, Blockstack, etc.
- Consortium blockchain - Consortium blockchain is a semi-decentralized blockchain. Here one or more entities, companies or persons could serve as the central authority. The administrator of the new block in a blockchain controls the entry of participants or users (entry into the consensus mechanism). Here a few users are given read access to the new block. While some others are given write access to the new block. So, it is not a fully decentralized network. Some of the well-known consortium blockchains include Ripple, R3, etc.
- Hybrid blockchain - Hybrid blockchain is a combination of both private and public blockchain network. Here some of the characteristics stay as that of private blockchain while some other stays as that of a public blockchain. This feature of hybrid blockchain gives us an extra edge on what information needs to be made public and what needs to stay confidential. Also, hybrid blockchains aim at providing tailor-made solutions to specific business requirements. Here, the blocks don't need to run on private hash nodes or private networks. Moreover, it uses an entirely decentralized network to run business operations. An example of a popular hybrid blockchain hosted on another blockchain network is Dragonchain.
For blockchain technology cryptocurrencies like Bitcoin, Ethereum is just the beginning. In the very near future, many industry sectors like banking, messaging applications, hedge funds, infrastructure security, advertising platforms, wills, inheritances, land registry management systems and much more are going to controlled through blockchain technology solutions.
For instance, in the land registry management systems the administration of blockchain significantly delivers:
- A record of the digital land registry
- An assurance on land property ownership's
- Smart contracts automation
- Proper document validation
- Enhances the trust between the parties involved
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