BLOCK CHAIN
What is Block Chaining?
What Is a Blockchain Platform?
How Many Blockchains Are There?
What’s the Difference Between a Private Blockchain and a Public Blockchain?
Who Invented Blockchain?
What’s Next for Blockchain?
How Are Blockchains Used?
Pros and Cons of Blockchain
How to Create a Blockchain
What is Block Chaining?
Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
What Is a Blockchain Platform?
A blockchain platform allows users and developers to create novel uses of an existing blockchain infrastructure. One example is Ethereum, which has a native cryptocurrency known as ether (ETH).16 But the Ethereumblockchain also allows the creation of smart contracts and programmable tokens used in initial coin offerings (ICOs), and non-fungible tokens (NFTs).
How Many Blockchains Are There?
The number of live blockchains is growing every day at an ever-increasing pace. As of 2022, there are more than 10,000 active cryptocurrencies based on blockchain, with several hundred more non-cryptocurrency blockchains.
What’s the Difference Between a Private Blockchain and a Public Blockchain?
A public blockchain, also known as an open or permissionlessblockchain, is one where anybody can join the network freely and establish a node. Because of its open nature, these blockchains must be secured with cryptography and a consensus system like proof of work (PoW).
A private or permissioned blockchain, on the other hand, requires each node to be approved before joining. Because nodes are considered to be trusted, the layers of security do not need to be as robust.
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two mathematicians who wanted to implement a system where document time stamps could not be tampered with.1 In the late 1990s, cypherpunkNick Szabo proposed using a blockchain to secure a digital payments system, known as bit gold (which was never implemented).
With many practical applications for the technology already being implemented and explored, blockchain is finally making a name for itself in no small part because of bitcoin and cryptocurrency. Blockchain stands to make business and government operations more accurate, efficient, secure, and cheap, with fewer middlemen.
As we prepare to head into the third decade of blockchain, it’s no longer a question of if legacy companies will catch on to the technology—it’s a question of when. Today, we see a proliferation of NFTs and the tokenization of assets.
There are more than 10,000 other cryptocurrency systems running on blockchain. But blockchain is actually a reliable way of storing data about other types of transactions as well.
Banking and Finance
By integrating blockchain into banks, consumers can see their transactions processed in as little as 10 minutes—basically the time it takes to add a block to the blockchain, regardless of holidays or the time of day or week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely. In the stock trading business, for example, the settlement and clearing process can take up to three days (or longer, if trading internationally), meaning that the money and shares are frozen for that period of time.
Given the size of the sums involved, even the few days that the money is in transit can carry significant costs and risks for banks.
Blockchain forms the bedrock for cryptocurrencies like Bitcoin. The U.S. dollar is controlled by the Federal Reserve. Under this central authority system, a user’s data and currency are technically at the whim of their bank or government. If a user’s bank is hacked, the client’s private information is at risk. If the client’s bank collapses or the client lives in a country with an unstable government, the value of their currency may be at risk
By spreading its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies to operate without the need for a central authority. This not only reduces risk but also eliminates many of the processing and transaction fees. It can also give those in countries with unstable currencies or financial infrastructures a more stable currency with more applications and a wider network of individuals and institutions with whom they can do business, both domestically and internationally.
Healthcare providers can leverage blockchain to securely store their patients’ medical records. When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be changed. Charity organisations can also use blockchain to keep records.
Blockchain has the potential to eliminate the need for scanning documents and tracking down physical files in a local recording office. If property ownership is stored and verified on the blockchain, owners can trust that their deed is accurate and permanently recorded.
A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions to which users agree. When those conditions are met, the terms of the agreement are automatically carried out.
The landlord agrees to give the tenant the door code to the apartment as soon as the tenant pays the security deposit. Both the tenant and the landlord would send their respective portions of the deal to the smart contract, which would hold onto and automatically exchange the door code for the security deposit on the date when the lease begins.
Suppliers can use blockchain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of not only their products but also common labels such as “Organic,” “Local,” and “Fair Trade.”
Voting with blockchain carries the potential to eliminate election fraud and boost voter turnout, as was tested in the November 2018 midterm elections in West Virginia. Using blockchain in this way would make votes nearly impossible to tamper with. The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and providing officials with nearly instant results. This would eliminate the need for recounts or any real concern that fraud might threaten the election.
Blockchain’s potential as a decentralized form of record keeping is almost without limit. From greater user privacy and heightened security to lower processing fees and fewer errors.
Pros
- Improved accuracy by removing human involvement in verification
- Cost reductions by eliminating third-party verification
- Decentralization makes it harder to tamper with
- Transactions are secure, private, and efficient
- Transparent technology
- Provides a banking alternative and a way to secure personal information for citizens of countries with unstable or underdeveloped governments
Cons
- Significant technology cost associated with mining bitcoin
- Low transactions per second
- History of use in illicit activities, such as on the dark web
- Regulation varies by jurisdiction and remains uncertain
- Data storage limitations
Click here to read more on blockchain at investopedia
How to Create a Blockchain
Step 1. Know your use-case.
Do your business interests lay in smart contracts area, data authentication and verification or in smart asset management? Define your objectives clearly at the very beginning.
Step 2. Choose a consensus mechanism.
For your blockchain to operate smoothly the participating nodes must agree on which transactions should be considered legitimate and added to the block. Consensus mechanisms are the protocols that do just that.
Step 3. Pick a blockchain platform.
Your choice of a blockchain platform will depend on the consensus mechanism you’ve selected. To give you a better idea of what is out there, here is a list of the most popular blockchain platforms:
- Ethereum (market share -- 82.70%)
- Waves (WAVES)
- NEMNxt (NXT)
- BlockStarter
- EOS
- BitShares 2.0
- CoinList
- Hyperledger Fabric
- IBM blockchain
- MultiChain
- HydraChain
- BigChain
- DBOpenchain
- Chain Core
- QuorumIOTA
- KICKICO
Step 4. Design the Nodes
If you imagine a blockchain as a wall, nodes are the bricks it consists of. A node is an Internet-connected device supporting a blockchain by performing various tasks, from storing the data to verifying and processing transactions. Blockchains depend on nodes for efficiency, support, and security.
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