10 things you should know about Blockchain Technology
Jun 15, 2017 Posted / 4051 Views
Using modern technologies, people communicate directly in different forms like video and voice calls, e-mails and instant messages irrespective of how far apart they are from each other. But when it comes to money transaction, there exist a trusted third party, usually a bank for the completion of this transaction. Here block chain allows consumers and suppliers to connect directly, removing the need for the third party.
Block chain is an open decentralised database created by the combination of cryptography and math for every transaction involving value, ie money, property or even work. It creates a digital ledger of transactions that every node on the network can see. The network is basically a set of computers being connected to the internet in which all the computers should give their approval for the transaction to take place. So anyone who has access to the internet can do these transactions, so that trusted third party organisations no longer serve any purpose in the task. Its potential applications can be found in the fields of automotive, financial, health care sectors and in voting.
Cryptocurrency is the medium of exchange created and stored electronically in a block chain, using encryption techniques to provide security during transactions and to verify the transfer funds. Bit coin is the best known example. Sending a bit coin via internet is as easy as sending an e-mail and we can buy anything online using bit coins. Bit coin transactions are being verified by miners.
This is the first thing we should keep in mind. Bitcoin is a cryptocurrency or digital currency which does not require any transaction fees, or time without a capitalized organization. Whereas block chain is the technology by which the transactions are carried out directly between sender and receiver using an open decentralized database. The first generation cryptocurrency was the bitcoin, established in 2008. A new currency ethereum executes peer-to-peer contracts using a crypto asset called Ether using the ghost protocol. In many ways the efficiency of ethereum is much high compared to bitcoin. Bitcoin, ethereum, Dogecoin, etc. are all examples of cryptocurrency while block chain is the underlying technology behind all these.
There is a lot of scope for blockchain technology in industries other than banking. In health care sector, blockchain technology can be used to store all the details about different patients. It will be easy for both the hospital administration and the patients to make sure that all the details related to the previous treatment of the patients are available in the hospital database. In the coming years, the governments can use blockchain technology for collecting taxes from the people and also to keep an accurate information about the amount of property owned by each person in that country. It has applications in many other industries like media, automotive sector, etc.
There are a lot of startups trying to revolutionize blockchain technology in any value-added transactions. These companies are involved in the creation and storing of different cryptocurrencies and the development of industry specific applications of block chain technology. For example, a company called Storj is building a decentralized cloud computing platform. Unlike Amazon, Google, etc. this platform helps in peer-peer communication between the nodes with minimum cost and less time. Many big companies like Google Ventures, Qualcomm ventures, and Techstars Ventures have invested in the project. There are more than 200 companies building this technology with mainstream companies as investors. Microsoft and IBM have already launched their products which allow blockchain technology.
Hyperledger is an open source collaborative effort of different industry blockchain technologies, hosted by Linux Foundation.All these industries, together they can build a new era of transactional applications providing trust, transparency, and security. It can be thought of as an operating system involving transactions related to business, finance, banking, and technology. These involved companies are collaboratively making and improving blockchain technologies and frameworks.
If we want to pay for something on the Internet, we usually use a credit or debit card. That card is connected to information about us, such as our name and billing address. We can use cryptocurrency the same way, but unlike with a credit card, the transactions we make with the currency are completely anonymous. There is no way to identify us personally using these transactions. Instead, whenever you trade in bitcoin, you use a private key associated with your wallet to generate a bit of code, more specifically an address that is then publicly associated with your transaction but with no personal identifying information. In that way, every transaction is recorded and securely signed in an open ledger that is the block chain, that anyone in the network can read and double-check.
The main example citing this is the WannaCry ransomware attack in which all the files in the user's system will be locked and $300 worth bitcoins were asked as ransom. Here anonymity of the bitcoins is what the hackers utilized in an illicit way. There are also criminal acts like drug transfers, child pornography, terrorist money transfers happening in the deep and dark web. All these use blockchain money transfers. Even though Bitcoin has such a disadvantage, there is a group called "Bit chain alliance" which has 25 companies from the blockchain industries and 25 law enforcement companies combinedly tracking these illegal transactions using blockchain tech. Bitcoin is a thing of public record. So even if there are privacy and anonymity, Bitcoins can be tracked when it transfers from one place to another in the ecosystem. Therefore there is a chance for law enforcement.
One of the most interesting applications of blockchain is the ability to create smart contracts. Currently, if we have to do a money transaction, it is carried out by using credit or debit cards using an online payment system like Paypal or by banks. It is a centralized procedure. There are some intermediaries in the transfer of money. But using blockchain technology, we can eliminate the need for these third parties by creating smart contracts between the sending and receiving parties.
For creating smart contracts, in which sender and receiver transact money without the help of a third party, a variant of the block chain, programmable block chain is being used. Simple transactions of bitcoins involve the possession of a private key by the sender and a signature involved with the private key at the destination. Since block chains are improving, multiple private keys and signatures can be incorporated, by using op-codes which is known as the programmable block chain.
If we are using credit or debit cards or writing cheques for the transaction of money, since it needs the approval of the centralized organization involved, it may take even hours or days for a transaction to be complete. Here is where the real advantage of blockchain technology comes into play. In the transactions using cryptocurrencies, there is no centralized system for the approval of a transaction, the reconciliation of money can happen immediately which helps in increasing the speed of transaction drastically.
By almost five years, more or less everyone will be able to do their transactions digitally using blockchain technologies in the enterprises and banking sectors. It's a prediction by 2027, 10% of the global GDP will be incorporated into the blockchain technology. Blockchain technology can be utilized for improvements in all the sectors and money transactions will be reaching a dream level.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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