What is Blockchain technology, Meaning, Definition, Advantages, Application, Disadvantage

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Blockchain technology is an emerging technology that has the potential to improve security in banking, supply chain and other transaction networks. It reduces the risk of fraudulent transactions, save time and eliminate intermediarie It is the safest mode of recording transactions between people. The technology i its present use allows the consumers and suppliers to connect directly, removing any needs of intermediaries.

It provides a decentralised database or digital ledger of information that on the network can see. It ensures security as well as transparency. Once an information is stored on a blockchain, it becomes extremely difficult to change o alter it. It has opened doors for creating a distributed consensus of digital online world. This allows the participating entities to certainly know that a digital ever has occurred. There are disruptive opportunities that have been created by the u of this technology everyone

What is a Block Chain?

A Block chain is a digital network that stores various kinds of information. Each block in a blockchain network stores information with the hash of its previous block. A hash is a digital code which belongs to the specific block in the netwo If information in any block gets modified, the hash is also modified. The connection of blocks through unique hash keys makes the blockchain secure. A blockchain network makes use of public and private keys in order to form a digital signature which ensures security and transparency. Blockchain allows the participants of network to perform digital verification and reach a consensus to agree on a particular value. While making any transfer, or uploading any information on the blockchain network, the sender uses their private key and announces the transaction on the network.

As transaction is made or information is uploaded on the network, the block is created. As information gets created in a network, the block is required to be validated by reaching a consensus. As soon as the information gets validated the block gets verified and is added to existing blockchain. In this way, the updated information is stored securely over the network.

Advantages of Blockchain Technology

The following advantages makes the block chain technology attractive for future applications

Decentralised Nature

Block Chain is decentralised in nature, meaning that no single person or a group of persons holds the authority of overall network. Everybody in the network has the copy of distributed ledger with them but nobody can modify it on their own, without the consent of people on the network. This approach of blockchain technology allows transparency as well as security to the people in the blockchain network. Decentralisation also allows for independent operation between users rather than being regulated by any authority.

Peer-to-Peer Networks

Blockchain makes the interaction between two parties easily possible via peer-to-peer network. The P2P protocol enables the people on the blockchain network to hold an identical copy of transactions. There is no requirement of a third party and any transaction can be done without involving any extra charges being paid to any third party that is regulating the network.

Permanent Storage of Data

Any data can be permanently stored in a blockchain network. Once any data has been processed, it can not be changed or altered due to the distributed nature of the ledger. If anyone in the network tries to change the data, they will have to change the hash of the previous blocks because each block contains a hash that is a unique digital address of that particular block. It is extremely complicated for someone to change all the hashes as it requires complicated operations. Hackers also cannot alter the data due to this reason.

Tamper Proof

It becomes easier to detect tampering of any data. Blockchains are tamper proof because changes in one block can be detected and fixed smoothly. A the hash of one block is linked to the next block, in order to tamper with the data, anyone will need to change hash of every block, which makes it impossible to do so. It prevents fraud in financial operations as well as data storage of any kind. If any editing in transactions take place, it can be easily audited.

Accountability

Blockchain offers higher degree of accountability to the people because every person on the network is able to see what kind of data is being uploaded or updated in the network. The network itself is not reliant upon any third person or any regulator. It removes any error in the uploading of data by creating unalterable ledger or blocks of information. Several core banking platform are working on blockchain technologies to remove any error in transaction values

Applications of Blockchain Technology

Blockchains have been primarily used for cryptocurrencies, which are decentralised currencies that work independently of the Central bank of a country. The nature of blockchain has allowed businesses all over the world to explore technology’s potential. The potential use of blockchain are

Smart Contracts

The terms of engagement between two parties involved in any business transaction is signed by them in the forms of agreements or contracts. The paper-based contracts are prone to fraud or errors which affects the trust between parties. Smart contracts are digital contracts that have been made using the blockchain technology. When any condition that is mentioned under the contract is not met, then the smart contract is automatically deployed. Smart contracts have been used for different industries such as financial agreements, health insurance, real estate property documents etc.

Digital Elections

Blockchains offer a potentially safe application in digital elections conducted using Electronic Voting Machines (EVMs). EVMs are not tamper proof and can be manipulated. But blockchain systems can be used to store election related data which can not be manipulated Chances of manual can be eliminated using blockchain technology. Thus, it allows greater reliability in choosing our representatives with fairness of the process,

Healthcare Uses

Blockchains can be used to store information related to a patient’s medical records. When a medical record is made, it can be incorporated into the system using blockchain which provides the patients with a proof that the health record can not be manipulated or changed. These personal health records can also be stored on the blockchain with private key encryption so that they are only accessible by certain individuals.

Banking Applications

By integrating blockchain into banking system, customers will be able to see their transactions processesed in few minutes rather than days With the safety of blockchain, banks have the option to safely and securely transact funds between institutions without any fraud, efficiently and in quick time. The banking transactions involve huge costs, but blockchain technology can be used to transact easily without involving any large transaction costs.

Property Records

The process of property records is cumbersome and involves frauds and manipulations. But blockchain can be used to efficiently store property records with ease. The technology has the potential to eliminate the need for physical manual entries which are error prone. Blockchain can be used to store data related to property without any error.

Supply Chains

Blockchain can be used to store data related to sales and purchases in supply chains. This allows the companies to verify the authenticity of their products. Blockchain is already being used in the food industry to track the path and safety of food through farm to user journey of the food product.

Disadvantage of Blockchain Technology

Several industries have applied blockchain technology to make their systems more reliable, fast and efficient. But the use of blockchain technology is not free of challenges. Various concerns associated with blockchains are

Higher Costs

The costs of blockchain technology is very high for smaller firms. Firms need large amounts of computational power, which requires huge investments in buying hardware as well as software technologies.

Speed

The transactions using blockchain technology are slower as compared to the transactions channels. Transactional channels can perform much faster transactions than blockchains.

Illegal Activities

Blockchain technology can be used to perform illegal activities because it is fully encrypted and unregulated. These activities can not be tracked easily because new blocks will keep adding in the current network.

Security and Privacy

Identities created in a blockchain network are encrypted. This, along with the decentralised system of blockchain makes it insecure and privacy concerns arise. To drive public acceptance of blockchain networks, privacy and security concerns should be addressed.

No Regulations

There are currently no regulations and governing mechanisms for blockchain networks. It reduces government oversight and its impacts businesses cannot be properly understood and managed if the whole system works outside the existing regulatory structure.

Conclusion

Blockchain has immense potential due to its diverse uses and various applications. Different types of problems can be solved with the help of blockchain technology. Blockchain provides security and trustworthiness in several ways. It has been widely claimed that blockchain will revolutionise the business and redefine companies and economies. A blockchain led transition is still years away due to the risks and concerns it poses. Blockchain has the power to transform ways in which people trade, get medical services, transform supply chains, and make more accessible and transparent for everyone. It will lead to improvements in people’s lives if blockchain’s potential are really fetched.

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