What is the Blockchain Technology?
Blockchain, which allows digital data to be distributed rather than copied, forms the backbone of a whole new type of internet. Although originally designed for the digital currency Bitcoin, the tech community is finding new potential uses for this technology.
Just like on the internet or in cars, you don’t need to know how it works to use the blockchain. But the more you use it, the better it becomes clear why it is a revolutionary technology.
Distributed Database
It can be thought of as a spreadsheet that is copied and distributed thousands of times over a network of computers but designed to be regularly updated. Information on a blockchain exists as a shared and constantly updated database. There are obvious benefits to using the network in this way. Because the blockchain database is not stored in a single location, records are public and can be easily verified. There is no centralized version of this information that hackers can access and corrupt. Since it is hosted on millions of computers at the same time, anyone on the internet can access the data in the database.
Robustness and Reliability of the Blockchain
Blockchain, like the internet, has an internal robustness. Because identical blocks of information are stored throughout the network, the blockchain:
1- It cannot be controlled by a single institution or organization.
2- It does not have a single breaking point.
Bitcoin was invented in 2008 and the bitcoin blockchain has been working since then without major problems. Under all the problems Bitcoin has experienced so far, there are either hacking efforts or administrative errors. In other words, these problems are due to malicious intent or human error; It is not because there are errors in the underlying concepts.
The Internet has survived for 35 years. This is good news for blockchain technology, which is still under development.
Transparent and Indestructible
Blockchain technology is a consensus that automatically updates itself every 10 minutes. Being a self-monitoring digital value ecosystem, the network updates every transaction that takes place at 10-minute intervals. Each of these transactions is called a “block,” thus resulting in two important things. First, transparency data is embedded and publicly available to the entire network. The other is that to change any know-how on the blockchain, a larger processing power is needed than that of the entire network, so it doesn’t get corrupted.
In this case, while it is possible in theory, it still seems impossible in practice. For example, if you take control of the system to collect Bitcoins, you also reset the value of Bitcoins.
Network of Nodes
The blockchain consists of “nodes” that do computation. A node is a computer running a client connected to the blockchain and responsible for approving and transferring transactions. Nodes automatically download an updated copy of the blockchain as soon as they join the blockchain network.
The combined nodes form a powerful second-level network that is completely different from the current functioning of the internet. Each node is an “administrator” on the blockchain and joins the network voluntarily. In this respect, it can be said that the network is not centralized. However, each node joining the network has a reward in the form of a chance to win Bitcoin.
Although what the nodes are doing is called “mining”, this is a misnomer. In fact, each node competes to solve computational puzzles. Bitcoin was at the center point of the blockchain at first. It is now considered just one of the numerous application areas of this technology. Even Bitcoin now has many alternatives, faster, more affordable gas-fee networks (such as Ethereum, Solana, Polkadot, Avax, Near ). Today, the number of Bitcoin-like cryptocurrencies exceeds 10000. In addition, potential adaptations of the original blockchain concept are currently in progress or are under development.
Blockchain is a decentralized technology by nature. Everything that happens on the blockchain affects the entire network. This also has some important consequences. As a new way of verifying transactions, the blockchain also overrides some aspects of traditional trading: For example, exchange transactions happen almost instantly on the blockchain, or records such as land registry can be kept entirely public.
The database that records Bitcoin transactions is jointly managed by a global network of computers using blockchain technology. So, the manager of Bitcoin is not a single institution, but the network itself. Its decentralization means that the network can operate on a user-to-user (P2P) basis. We are only just discovering the potential of this massive collaboration.
Who Will Use the Blockchain?
As with the web infrastructure, it is not necessary to know the inside to benefit from the blockchain. Currently, the biggest use case of blockchain technology is in the financial world. The World Bank says money transfers in 2015 exceeded $430 billion, and blockchain developers are still in great demand right now.
The blockchain can eliminate the middleman in such transactions. Just as graphical user interfaces (GUI) have made computer use accessible to everyone thanks to the desktop concept, graphical user interfaces called “wallet” are used to use the blockchain. People use these apps to shop with Bitcoin or store with other cryptocurrencies. Of course, there are different types of wallets. Hot and cold wallets are the types of wallets available to most users now.
Online transactions are closely related to authentication processes. We can be certain that in the future, wallet applications will pave the way for other types of authentications.
Does Blockchain Mean a New Web 3.0?
Blockchain gives internet users the ability to create value and validates digital information. How will businesses benefit from this? Distributed ledgers, called “smart contracts”, make it possible to code simple contracts that only operate when specified conditions are met. Ethereum is an open source blockchain project built just for this purpose. Although still in development, Ethereum has the potential to expand the usefulness of blockchains to world-changing scales. With the Ethereum 2.0 update and many more major updates, we will see bigger changes with developments.
At the current level of technology, it is possible to program smart contracts to perform simple functions. For example, using blockchain technology and Bitcoin, you can make a payment when a certain financial instrument reaches a certain level. For example, those who currently want to share a transportation vehicle need an agent like Uber. However, thanks to peer-to-peer payment, blockchain can lead to a direct interaction of parties and a truly decentralized sharing economy.
Protection of Intellectual Rights
As it is known, it is possible to copy digital information endlessly and distribute it everywhere thanks to the internet. This provides web users with a goldmine of free content. However, copyright holders are not so lucky. They both lose their intellectual rights and therefore suffer material damage. Smart contracts can protect copyrights and automate the online sale of creative works, eliminating the risk of file copying and distribution. This is the reason why NFT works, which are very popular especially at the end of 2021, are so appreciated and used.
The fact that blockchains enable payment in fractional cryptocurrencies (i.e., micropayments) suggests that blockchain has a great chance of success in this scenario.
Identity Management
There is no doubt that better identity management on the web is needed. Authentication is the weak point of all financial transactions over the internet. However, solutions to the security risks that come with web commerce are not good. Distributed ledgers offer improved methods of proving who you are and the opportunity to digitize personal documents. Having a secure identity will also be important for online interactions in the sharing economy. After all, having a good reputation is the most basic requirement of online shopping.
In the blockchain technology, which has been gaining weight in our lives for the last 5 years, and where projects have developed in every field, especially in the last 1.5 years; Decentralized Exchanges (DeFi), then digital art with NFT, Metaverse where many big companies work, and then Web 3.0 technologies where the big internet revolution will take place. All of them are great innovations brought by a technology written in 2008. We will wait and see with great excitement where the places he will go next.
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