Blockchain is not what you think (And What it Really is!)
New Solution to Old Problems or Solution to Problems that do not exist?
If you have a bit of exposure to technology, then I’m sure “Blockchain” is a term, heard or read somewhere. If not “Blockchain” then of course “Bitcoin”. It’s pretty much popular in daily newspapers for the fraud feature. Giving a layman overview, bitcoin is a digital currency (cryptocurrency for the geeks!), it’s virtual, generated and transferred digitally (yes, through computers and mobiles!).
Bitcoin is just one of the 5078 cryptocurrencies (click on the link to make sure!). Moving over to the primary ingredient of our post, “Blockchain” is introduced as the technology behind cryptocurrency. For ‘how’, ‘what’, ‘when’, keep reading!!!
What it is?
So, it was October 31, 2008, when the bitcoin white paper was published. It was then the word “Blockchain Technology” made its debut. I’m sure the first step every human follows is Google search. Tried your luck already? The concept seems a bit arduous at first sight. As per my research, “Distributed Ledger” is the most common word used to describe blockchain. Let’s decode!
Revisiting the concept of Internet, there is a centralized server and multiple nodes connected to it. The transfer of data is from server to nodes where the server acts as a governing authority. Basically, a centralized repository. Now, blockchain is the opposite. No centralized server, no central authority, all the nodes have veto power! It is based on the concept of decentralization.
Here, each node is connected to every other node of the network. Suppose, there are some 50 odd nodes in a network and a document has to be shared with all the nodes. So, node 1 broadcasts the document to the network. Now, nodes 2, 3 and 4 have made some updates to the document. They need not ask node 1 to share the updated copy of the document to the network. The updated copy already gets through the network. Consider working on Google docs and it will be easier for you to understand.
As you can see, there isn’t any server and client concept here. Every node is equally authoritative. It’s public and it records every transaction like in a ledger. Hence, the term “Distributed Ledger” is the best fit to portray blockchain.
- A new age transaction channel for quick transfer of funds and other digitally transferred entities.
- The decentralized nature eliminates the need to trust any external/centralized entity (like governments, banks, and other such organizations).
- It saves time because of fewer iterations as compared to the centralized model.
- Less vulnerable to hackers as there is no single point of failure.
- It works on the hashing algorithm, making easy to track, read and save.
What it isn’t?
When we stumble upon something unfamiliar, it is contingent to form baseless misconceptions. Blockchain isn’t spared either. So, let’s break it down:
- Broadly known for the technology behind bitcoin but that’s not the only case. Blockchain isn’t limited to cryptocurrency. In fact, it has applications in many industry verticals like healthcare, administrative, cybersecurity, etc.
- Blockchain claims to be anonymous (as in no one can know the identity of the person responsible for the transaction). However, in reality, the public address is openly visible and if someone knows your public address, then can trace all your transactions.
- It is said the transactions carried out on a blockchain are irreversible. But with 51% attack, transactions can be reversed as blockchain is under control of corrupt miners. This also doubts the accuracy of the blockchain.
- As there is no intermediate between two parties, you would have assumed it to be free. Still, network fee is payable and it increases with increasing no. of transactions.
What it can solve and what not?
Unlocking its potential, blockchain can disentangle some botheration as follows:
- Let’s begin with smart contracts. Here, the concerned parties agree over a certain condition and it executes the contract only when the condition matches. So no backing off or betrayal as in case of currently used normal contracts.
- The decentralized nature of blockchain solves complications involving time management, trust issues, and administrative tasks.
- Substantially minimize issues comprising human errors and hence beneficial for copyright infringement, automation, finance, and insurance sectors.
- Blockchain revolution is reforming various industries. Seeing an instance from healthcare domain, we can store case history on blockchain (concealing patient’s identity) for doctors to study irrespective of the geographic location. This can cause a better and speedy recovery.
- Blockchain can save confidential information. You may think about how? It’s public! But there is a blockchain called “Permissioned Blockchain” where a particular piece of information can be accessible to a few members on the network.
- The payment process will no longer see geographical boundaries, high transaction time and fees.
So far, you learned the purpose served by blockchain but there is a thing or two where it has not yet excelled. For instance:
- Real-time validation has been a tough task for blockchain as confirmation time is longer because of its decentralized nature.
- Bots used until certain limit are productive overuse is terrible. Blockchain cannot recognize whether the data input is from humans or bot and thus resulting in redundant and inappropriate input.
Success Rate and Future Prediction
(P.S. This is just hypothetical! We can examine the actuality of these predictions at the given point of time.)
- If things go well off, we can have cleverly distributed data models with easy and restricted access. Different elements/systems can be standardized and/or collaborated well.
- Chain ecosystems like supply chain can get a broader uplift incorporating transparency and security.
- Governing bodies will adopt blockchain for better administration that will be smooth and transparent. Other major adoptions would be in economy/finance and healthcare.
- Integration of blockchain with other technologies like AI and IoT for better solutions.
- More or less improvement in cybersecurity.
- Things are most likely to go well but a bit of chance of failure in case of lack of mass adoption.
Apparently, these are little bits of blockchain just to give a layman overview. There is much more and deep. I’ll try to accumulate as much as possible in my upcoming posts. That’s all for now! Any questions or suggestions are taken in the comment section.
Originally published at https://digitattle.blogspot.com on February 15, 2020.
