What is Blockchain? and its Scope?
A layman’s technical explanation and insight into the basic concepts of Blockchain technology and its scope in the current scenario.
Blockchain Overview
A blockchain as the name suggests is a series of blocks linked in a chain fashion. Each block contains data/information and has its unique identifier(just like a student’s roll number) known as the “Hash value” of that particular block. A block also stores the previous block’s hash value, which establishes a connection between the two blocks and thus forms a chain-like structure. The first block is known as “Genesis”(whose literal meaning is the beginning or origin of something) and as being the first, there is no previous block so its previous hash is 0.
Slight Technical explanation
Blockchain technology combines one of the “Cryptography concept(SHA 256)” and “Distributed Peer to Peer Network” which results in producing the underlying use case of blockchain i.e., an Immutable Ledger. Now let’s see what these above terms mean in context with the blockchain.
Cryptography Concept(SHA-256)
Cryptography is the practice and study of secure communication such that people or groups involved in digital communication can only have the right to read or write data accordingly so that third parties cannot intrude. SHA-256 is one such algorithm developed by National Security Agency(NSA), U.S.A.
SHA-256 stands for Secure Hash Algorithm-256. SHA algorithm takes input as any digital file and produces 256 bits long(64 characters long in hexadecimal)almost unique code which identifies the file. It is one of the Hash algorithms. If any small change is made in the file even a change of one character, the complete hash value of that file changes, this is known as the “Avalanche effect”. The whole process is one way i.e. one cannot extract the data given its hash value and deterministic i.e. no two files can have the same hash value. The probability of matching hash value (collisions) exists, however it’s too small.
Similarly, in each block of a blockchain SHA-256 is applied to generate a hash value of that particular block.
Distributed Peer-to-Peer Network
Blockchain is not stored in one centralized database, however, it is stored in multiple systems connected through a network. Let’s see the benefit of it. For instance, Block A and Block B are connected, such that block B stores the hash value of block A in block B’s previous-hash segment. If someone tries to hamper the data in block A, its hash value changes completely, now the current hash value of block A and the hash value of block A which was already stored in block B(in the previous block hash segment) do not match, thus the connection gets broken, i.e. all the hash values and previous hash values of all the blocks post the hampered block(Block A in this case) needs to get change which is quite difficult and even if someone manages to modify the “Previous Hash” and “Hash value” of all the further blocks, it’s still of no use because copies of the blockchain are stored in various systems connected in a network, any changes made in one copy gets checked with the other copies. Copies of the chain are stored in multiple systems and even if one blockchain in a system experiences a change, it automatically reverts the changes to come back to its original form as the chains are compared to each other in the network in a regular fashion so that uniformity and a consensus is maintained. Therefore, if someone has to hack into the blockchain, the changes should be made to the majority of the system connected to the network so that the modification is not reverted to its original form which is quite difficult to do to date.
Immutable ledger
A ledger is a book in which people or company records the money transacted. The above two concepts make a blockchain a reliable and secure immutable ledger where one can not alter the data. Each block can record the transaction and when it’s done it cannot be manipulated by others.
Cryptocurrency is one such earlier use case of the Blockchain. Each block contains transaction details. Each block also contains a field known as “Nonce” shorthand of Number only used once. By changing this value, the hash value can be changed. This value is to be predicted and this is what mining is to find a suitable nonce value that produces a suitable hash value of that block as specified in the algorithm by the developers so that a block can be added to the chain.
SCOPE
With the advent of Blockchain, several technologies have been created based on blockchain such as cryptocurrency, NFTs(Non-fungible tokens), DeFi(Decentralized Finance), etc. A part of the world is heading towards a lot of exchanges of assets of different categories. A lot of companies are trying to create blockchain solutions. As companies and people are working on Metaverse which will act as a driver to these technologies and would push the human race forward, however, a lot of risks are also involved if one does not tread carefully. Let’s see if it becomes the next revolution or not!
A few years back, there were majorly 3 to 4 ways for a person to invest such as share market, FDs, and Gold; however, with such technologies, the investment market is expanding, which can boost the economy if worked in a proper direction.
Jobs requiring Blockchain developers as of 2022 are increasing as time progresses. More and more people are entering this community. And due to the various cryptocurrency exchange platforms, a lot of people are now curious to gain knowledge about these technologies.
