Blockchain and its Applications
“Bitcoin-Bitcoin-Bitcoin” is a term we hear a lot these days. We all know that Bitcoin is a cryptocurrency, but do you know what concept or technology it is based on? It is the blockchain that made Bitcoin and other cryptocurrencies possible. You may be wondering what it is and how it affects you? Do not worry, I am here to help you.
Let us formulate the definition from a developer’s point of view to understand it later.
Blockchain: It is a decentralized, trustless, distributed, immutable digital ledger (that stores transactions or data). Here, the transactions or data are stored in the form of blocks that are linked to the previous block — hence the name blockchain.
Basic terms in the blockchain:
Digital ledger: it is a database where data or transactions are stored.
Immutable: The ledgers in a blockchain are immutable, meaning they cannot be changed once they are stored.
Distributed: Data is stored on multiple computers on the network or on nodes that verify the data.
Trustless: parties do not have to trust each other, but the blockchain mechanism is based on consensus algorithms (such as proof of work, proof of stake, etc.)
Decentralized: There is no third-party involvement, i.e., no central authority, and thus everyone has an equal say.
Cryptography and hashing are used in Blockchain for digital signatures and many other purposes, which increases privacy, security and trust.
The working of Blockchain is shown in the diagram below:
Blockchain is an emerging technology with many applications such as banking and finance, supply chain, elections, healthcare, insurance, user data ownership, etc. and many more applications are under development.
1. Banking and finance: The very first application of Blockchain was Bitcoin, which is used for payments. It made transactions between countries smooth and easy. Besides Bitcoin, there are many other cryptocurrencies in the market (Ethereum, Binance Coin). Blockchain can simplify banking and banks have realized this and are working on Blockchain in banking (ICICI Bank is the first to do this in India).
2. Supply chain management: In the blockchain, transactions are documented in a permanent decentralized record and monitored securely and transparently, reducing time delays, cost and labour. It helps in easy verification of authenticity and fair trade status of products by tracking their origin.
3. Voting: it can be used to store voters’ data, verify them and count their votes anonymously without being influenced by third parties, and thus can increase the strength of democracy.
4. Healthcare: Storing and securing patient data is a major problem for hospitals, which can be solved by blockchain. It can also help patients by giving them ownership of their health reports, which is currently not the case.
5. Insurance: The insurance industry is based on managing trust, and Blockchain is a new way of managing trust between parties. So it can be used to verify many types of data in insurance contracts, such as the personal identities of policyholders. It makes the insurance industry fast and secure.
6. Ownership of your data: Big companies like Facebook, Amazon and Google share their users’ data.
However, if the data were stored on the blockchain, the user would own his data and no one could sell or use it without his consent. But if he wants, he can share it and earn rewards. Blockchain increases privacy and security on the Internet by giving users ownership of their data.
Blockchain is still in its early stages and there is still a lot to explore, but it will be a disruptive technology for the future.
Hello readers, I am Abhishek, this was my first article/blog and I am trying to improve in this field, your feedback is much appreciated.
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
