Haven’t heard of blockchain technology yet?Chances are very rare that you didn’t.In this article I’m gonna decode everything you need to know about blockchain technology.Here’s Everything you need to know about blockchain explained in simpler terms.
Technology only exists to solve a problem or just make things better else it wouldn’t be commercially scalable or successful.Remember the stock market crash in 2008 that left the world shocked?Yeah everyone remembers that very well.Markets may crash based on various factors such as political instability,economic weakness ,surge in oil prices or whatever.
So we trust our governments to govern us and maintain in a central and accountable way.We accept Dollars as valuable coz we belief that you can get anything worth of your money, it can be goods or services.Dollar is benchmark we measure how rich or how poor a person is.
In order for a transaction to happen between 2 people you need lot of middlemen such as banks,governements,brokers and so on.What if there could be a way doing this in a digital way which is just peer-peer meaning the government,banks and anyone else have no business in your transaction.
A group of anonymous people who call themselves satoshi nakamoto have come up with peer to peer electronic cash system idea which is the foundation of blockchain technology that powers bitcoin.
What is Blockchain technology
So what exactly is blockchain?It is the technology that powers bitcoin which is the first cryptographic digital currency. In internet you have data, text,images,videos,files and all sorts of information.In blockchain based system you have all sorts of records about you like your driving license,the car you own and the cost you paid to own it and so on.
Blockchain is based on fundamental concept of trust in an open system and system is built upon trust.Each computer connected in the blockchain network also known as hosts holds records of transactions made and they’re available everywhere in decentralised way.
The data of all the records also known as blocks is encrypted by hash functions cryptographically also known as public ledgers.Hence consistent data is available across all the systems.Each of the blocks are periodically updated and added to the network as a chain, hence the name blockchain.When an intruder tries to tamper a block on one system the other systems will reject the transaction as the hash value of modified block will be different and if other systems find any irregularity in one particular block that block can be ignored altogether.
Before the blocks are added to the chain of existing blocks there are other users who solve complex math problems often called as miners and when they find a solution add the hash value and the hash value is verified by other users and added as block in the network.Once a transaction is added to the block it becomes permanent which may affect privacy of some people but as the system is built upon trust, you needn’t worry much.
How is your data safe and digitally verified
As the whole blockchain technology is based on cryptography there are two components one private key which is unique to the user and remains within himself and a public key which is unique but available to all other users in the network.
When you request a transaction its encrypted with your private key and when other users can decrypt it with your public hence knowing its you who raised the transaction ticket and there’s no middleman attack or snooping.All the blocks are encrypted using SHA 256 bit algorithm the same method that encrypts your payment information on e-commerce sites like Amazon or eBay.
Who are miners and what’s their job
Miners are geeky people who tend to solve the complex cryptographic puzzles of a transaction and verify the validity of a transaction before announcing it to the network which is then validated again by other miners by verifying history of previous transaction of that block, simply meaning you can’t sell the same ticket twice.
Once the transaction is approved data is blocked and this data is available to everyone else in the network hence they know you have sold your tickets at that certain price to a particular person.
What’s in for them given mining is a time and current consuming job that costs literally very high and requires super powerful computers to solve complex math problems.For every block of transaction they’re rewarded again in bitcoins 12.5 to precise, kinda like commission.They need high speed computers and their electricity bills cost more than what they earn.
Is there any Limit on Bitcoin or other crypto currency
Turns out yes, there’s a limit on number of bitcoins generated.It’s clocked around 21 Million per year and even year generation is halved and more and more people already have bitcoins to use hence no need for endless production.Simply put together, just like our government prints limited number of dollar bills,bitcoin aims to do the same.
There are roughly 300 Million transactions based on blockchain technology.Another cryptocurrency Ether has popularised something called smart contracts.Smart contracts are kinda like rules set by people and followed by people.
They’re basically set of business rules set to execute on specific conditions and triggers.Let’s say you own an electric car, you can set up a smart contract to charge your car when electricity cost goes down or maybe buy bitcoins only after its price surges by 100$. The possibilities are endless.
Decentralised Autonomous Organistion
Blockchain can even power decentralised organisations that can set up business rules themselves and agree upon and get connected through network and work from anywhere in the world.It is just a decentralised democratic organisation.
How is Blockchain Used
Walmart is using its blockchain to verify that contaminated food doesn’t enter its supply chain.De Beers is using blockchain to verify that diamonds obtained are from genuine sources and not blood diamonds.Few drone companies are using blockchain to power autonomous self driving pods.
Microsoft is experimenting its own framework based on etherum. Blockchain systems act as public digital ledgers so there are many companies scrambling to bring it to voter ID verification system, insurance system, online transactions and more.
Blockchain is a very interesting technology that has far more implications than bitcoin,ehter or other digital cryptocurrencies.Blockchain however needs proper coding as faulty coding would compromise systems altogether.Criminals can also remain anonymous using this blockchain which is what happened when ransomware malware hit computers across the world. Blockchain is really a technology to look out for and I’ll be covering more of it as the technology progresses.