Blockchain is a technology that has introduced various innovations in the IT industry and contributed to the digitization of the world. It is a technology that gave a secure way of storing confidential information and ensure authorized access.
The term blockchain is mostly used in cryptocurrency. It is an online record in the form of blocks that are generated from various servers and PCs across the world. In the block, information such as hash value, timestamp, and data about a particular transaction is secured by hashing it with a strong cryptographic function. Hash of the previous block is stored in the block, in this way a chain is formed.
Pillars of Blockchain
In the blockchain infrastructure, three attributes contribute to a secure distributed ledger. Pillars of blockchain define its efficiency and to maintain a balance between all three is crucially important.
The three pillars of block chain technology are:
The decentralized nature of blockchain technology ensures build trust among peers. Instead of taking services from a middleman in the form of banks or third-party, entities can connect and support transactions on their own.
In the crypto industry, decentralization is the key feature. It helps build a secure platform, there is no single point of failure, data is shared among all peers having a copy of all information at each node.
Blockchain such as Bitcoin gain popularity across the world. A centralized platform has a central hub and a single point where all transaction information is stored. Since it is not the case in blockchain, the independent system attracts individuals more and provide more opportunities to mine coins.
A scalable approach of blockchain technology generically expands the capacity to run tasks simultaneously. At the same time, a huge number of transactions take place after validation becomes part of the ledger.
Blockchain keeps on expanding holding millions of transaction records in a little time span. The scalable nature of blockchain makes it more popular and demanding. A ledger keeps a chain having records of each transaction in a secured manner i.e. it is encrypted strongly so that no third-party entity could access or make edits into it. As the chain keeps on getting bigger, more secure it becomes having a hash of hash and so on.
Security, one of the major reasons that are sustaining blockchain technology and its popularity is sky rising. Here security refers to both privacy and data protection. Blockchain ensures secure access over data and no unauthorized entity could access, edit, or delete the data from the ledger.
For instance, crypto wallets save the digital location of a user and provide online services by integrating the system with some block chain. The transactions are updated there ensuring controlled access in place.
Benefits of Blockchain Technology
Following are some benefits of blockchain technology:
- Transparency is ensured as each entity who is part of the network can access the information in a secure manner
- Decentralized ledger, therefore there is not a single point of failure as it costs more in case of data loss. The decentralized database ensures that the same data is present to each node so that if one node loses data, others will have a copy of it.
- A number of individuals can collaborate and participate in the blockchain and can share information as well.
- A secure platform for investors to fund in blockchain development and its similar projects.
- Compliance initiatives such as KYC/AML compliance (Know Your Customer & Anti-money Laundering) can be achieved efficiently using blockchain technology. It is used by banks and financial institutions to secure their transactions by validating each identity.
- The information will be accessible publicly and it cannot be altered. Therefore eliminates the issues related to data tempering.
Resourceful Application of Blockchain
Blockchain can be and is useful for a number of potential industrial applications, which include:
- Financial transactions in cryptocurrencies to ensure anti-fraud and secure transfer.
- In tax management, block chain can be used to maintain a database of who needs to pay what amount of tax and what is tax history
- While onboarding products and goods, online retailers can maintain a history of orders along with the confidential customer information in blockchain to protect it from unauthorized access.
- While securing the data at the governmental levels such as during elections and voting, all the data can be stored in the blockchain to eliminate the chances of tampering.
- In medical record management, blockchain can be used to store confidential medical data of patients
Because of the numerous benefits of blockchain technology, it is penetrating into every industry securing the databases and confidential information so that no unauthorized entity could access it.
Moreover, the data is encrypted using a strong cryptographic hash function to make it unreadable for people until or unless they have a secret key to decrypt it. These hash functions ensure that for the same input, the output will be the same, the output cannot be decoded to get the input. These parameters make blockchain technology more secure.
Main Challenges of Using Blockchain
The lack of awareness and understanding of the Blockchain concept and how it works are the key challenges of Blockchain technology in sectors other than the financial sector. The complexity of the existing traditional business infrastructure and the lack of adequate technical knowledge are a major obstacle to the widespread uptake of block sums.
It is often the case that there is a need for cultural change from conventional pathways, as this ensures that the whole process is decentralized.
The key roadblocks in Blockchain’s adoption often improve compliance with the existing regulations, the necessary data protection and the necessary safety for the shared databases.
The world of business has not yet fully explored the nuances of the Block chain concept. But we believe that the business world will soon realize the huge potential of this technology and drive a new wave of decentralized applications with ongoing research and development taking place in this area.