Why is Blockchain much needed?
Why Blockchain is getting the hype? Does it have any cons? What all changes can it bring? Will it be the future?
This article helps you find the answers to all the above questions.
What is Blockchain?
Blockchain technology is most simply defined as a decentralized, distributed ledger that records the provenance of a digital asset. In other words, it is a growing list of records, called blocks, that are linked using cryptography. It is sometimes referred to as Distributed Ledger Technology (DLT), which makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.
So in simpler words Blockchain can be told a mix of two major technologies ie, Distributed Database and Cryptography, and here the information is Verifiable, Immutable, and Tamper-proof.
When, who brought Blockchain into existence?
The major incident which made Blockchain come into existence was the Financial crisis of 2007–2008 also called the Global Financial Crisis (GFC), which was a severe worldwide crisis. The bank that led to this was the Lehman Brothers which was a financial giant.
Blockchain was invented by a person (or group of people, still anonymous) using the name Satoshi Nakamoto on 31st October 2008 to serve as the public transaction ledger of the cryptocurrency Bitcoin. The identity of Satoshi Nakamoto remains unknown to date. Satoshi stated “Bitcoin: A peer to peer electronic cash system.”
“A Blockchain is a constantly growing ledger that keeps a permanent record of all the transactions that have taken place,in a secure,chronological and immutable way in decentralized distributed network.”
Why Blockchain?
In this technology no hacking is possible,it has a huge security boost,Data Transparency and it is Decentralized.So once we start following this technology,things we are not going to face is issues with Authenticity,trust on a third party and whether our data will get tampered.
“The whole point of using a blockchain is to let people — in particular, people who don’t trust one another — share valuable data in a secure, tamper-proof way.”
— MIT Technology Review
Structure of Blockchain
As told it is a digital ledger consisting of records called blocks that is used to record transactions across many computers so that any involved block cannot be altered retroactively,without the alteration of all subsequent blocks.
So the image above gives us an idea how the blocks are arranged in Blockchain.Blocks hold batches of valid transactions that are hashed and encoded into a Merkle Tree.Each block includes the cryptographic hash of the prior block in the Blockchain, linking the two. The linked blocks form a chain.This iterative process confirms the integrity of the previous block, all the way back to the original genesis block.The genesis block is the starting block.
So a Block contain:
- Block Number
- Transaction records
- Previous Block Signature
- Mining Key
SHA-256 is the signature of the content in the block.SHA stands for Secure Hash Algorithm.This is how it looks like:
c672b8d1ef56ed28ab87c3622c5114069bdd3ad7b8f9737498d0c01ecef0967aSo visiting this page gives us a good idea on how Blockchain works and we can get an idea about how data stored in the Blocks and we can also get how a change in data can affect the other blocks.Give a look,its worth it.
https://andersbrownworth.com/blockchain/blockchain
What are the types of Blockchain?
The types are :
- Public Blockchain: it is not governed by any comapany,government, or anyone.It is been stored and maintained by individuals.It has mining invloved in it.These are designed to be fully decentralized, with no one individual or entity controlling which transactions are recorded in the Blockchain or the order in which they are processed.The examples are Ethereum,Bitcoin.
- Private Blockchain: are also called permissioned Blockchains.This type will be governed by a private company.These are valuable for enterprises who want to collaborate and share data, but don’t want their sensitive business data visible on a public Blockchain.The examples are R3 Corda,Ripple(XRP) and Hyperledger..
- Hybrid/Consortium Blockchain: it is goverened by a group of Private Stakeholders/Organisations.It is the shared resources which is hosted by all the stakeholders, and they all store the data in it.Examples are Multichain,Dragonchain.
What is the difference between blockchain and cryptocurrency?
Many people are confused on the differences between Blockchain and cryptocurrency. A relatable way of framing this relationship is to compare it to an application on your phone , and the platform on which that application is running. Blockchain is the platform and cryptocurrency is an application that runs on the Blockchain platform. The confusion stems in part from the fact that the platform (Blockchain) and cryptocurrency (Bitcoin) launched at the same time.
Where can we use Blockchain?
- Cryptocurrency
- Smart Contract
- Digital Voting
- Government Registration of Land
- and many more….
What are Smart Contracts?
We all have heard about contracts.They are a legal bond between two or more parties.A Smart Contract is a certain piece of code ie contract which is stored inside the Blockchain network when certain condition are met and they are executed on their own.At the most basic level, they are programs that run as they’ve been set up to run by the people who developed them.Solidity is an object-oriented programming language for writing smart contracts. It was developed by Christian Reitwiessner, Alex Beregszaszi, Yoichi Hirai and several former Ethereum core contributors to enable writing smart contracts on Blockchain platforms such as Ethereum.This language is influenced by JavaScript,C++,Python,Powershell.
We can run the code on VS Code(Visual Studio)by adding the solidity extension or on Remix IDE.Remix is an online IDE.Here is a sample smart contract on selling cars made using solidity.
pragma solidity >=0.4.17 <0.7.0;contract Car{
string public owner;
string public cost;
string public model;
function Car(string newOwner,string newCost,string newModel)public{
owner = newOwner;
cost = newCost;
model = newModel;
}
function setDetails(string newOwner,string newCost,string newModel)public{
owner = newOwner;
cost = newCost;
model = newModel;
}
function getDetails() public view returns(string,string,string){
return(owner,cost,model);
}
}
Remix Ethereum IDE: https://remix.ethereum.org/
What are the Disadvantages of Blockchain?
1.51% Attacks
The Proof of Work consensus that protects the bitcoin Blockchain has proven to be very efficient over the years. However, there are a few potential attacks that can be performed against blockchain networks and 51% Attacks are among the most discussed. Such an attack may happen if one entity manages to control more than 50% of the network hashing power, which would eventually allow them to disrupt the network by intentionally excluding or modifying the ordering of transactions.
2.Storage
Blockchain ledgers can grow very large over time. The Bitcoin blockchain currently requires around 200 GB of storage. The current growth in blockchain size appears to be outstripping the growth in hard drives and the network risks losing nodes if the ledger becomes too large for individuals to download and store.
3.Inefficient
Blockchains, especially those using Proof of Work, are highly inefficient. Since mining is highly competitive and there is just one winner every ten minutes, the work of every other miner is wasted. As miners are continually trying to increase their computational power, so they have a greater chance of finding a valid block hash, the resources used by the Bitcoin network has increased significantly in the last few years, and it currently consumes more energy than many countries, such as Denmark, Ireland, and Nigeria.
4.Data modification
Another downside of blockchain systems is that once data has been added to the blockchain it is very difficult to modify it. While stability is one of blockchain’s advantages, it is not always good. Changing blockchain data or code is usually very demanding and often requires a hard work, where one chain is abandoned, and a new one is taken up.
Conclusion
Blockchain in the future will revolutionize business processes in many industries, but its adoption requires time and efforts. Nevertheless, in the near future, we can expect that governments will finally accept blockchain benefits and begin to use it for improving financial and public services. Though some blockchain startups will fail, people will get more experience and knowledge on how to use this technology. Blockchain will stimulate people to acquire new skills, while traditional business will have to completely reconsider their processes. All in all, by 2020, we can see more examples of successful implementation of Blockchain technology.
