You might have heard the term Blockchain if you have been following investing, banking, or maybe interested in cryptocurrency, the basic ideology of ‘’Blockchain’’ is the technology behind the network of Bitcoin.
What is the meaning of Blockchain?
The concept of Blockchain is quite elaborate however the basic aspect is the ‘’Type of Database’’. A database is defined as a collection of data/information that is being stored electronically on a computer system. The data that is stored is generally in the table format for convenience. It’s comparatively easier to filter out any specific information from a table structure. The question comes up: what’s the difference between spreadsheet and database then?
Spreadsheets are convenient and useful for the usage by an individual or a small group in order to store information for accessing it in the future. However, on the other hand, databases are useful for larger groups to store data/ information. It can be further filtered, changed, and accessed easily by multiple people simultaneously.
The data from here are stored on the servers of capable computer systems. The server is made up of multiple computer systems like hundreds of them, in order to acquire power and the capacity to store information. These types of databases are generally authorized by a business or an organization, besides an individual has control over it entirely.
What’s the difference between blockchain and database?
There are some differences they can be differentiated upon. Here are the points that make database and blockchain different from each other-
The major difference between these is the way data is structured for both of them. In terms of Blockchain, the data is stored in groups generally termed as blocks. Blocks consist of greater capacity to store data, they are connected or chained together that forms a chain so that the data stored in it is known as Blockchain. Every time new information is entered into the new block it is already chained to the previous one. Whereas, for the database, the data is stored in tables. The concept is now simple, all blockchains can be databases but not all databases can be blockchains. Every block in between the chain is given the precise and exact timestamp at the time it is being added to the chain.
In order to understand this point let’s take the example of Bitcoin to understand it better. Similar to the concept of storing data in a database, Bitcoin also requires a set of computer systems for storing the data. For Bitcoin, the blockchain is a kind of database that is bound to store each Bitcoin transaction that is being made. The computer systems involved in this process are not operated or controlled collectively by a single entity rather they are all controlled individually. For example, an organization owns 10,000 computer systems together for storing details of a client’s account. All the computers are kept together however, they are operated separately. In the case of Bitcoin, multiple computer systems and every computer that consists of Blockchain in different locations geographically are controlled by individuals separately or by small groups. These computers in short make the entire network of Bitcoin known as ‘’Nodes’’.
In a similar way, the Blockchain of Bitcoin is used in a decentralized manner. On the other hand, the centralized blockchains where computer systems form a network are owned by an individual. Every node in Blockchain is stored with the information. In the case of Bitcoin, information is history for all the transitions of Bitcoin. In case any wrong information gets stored in the node then it has the chance to correct itself with the help of multiple other nodes. In thi is the way the translation history in the blocks is irreversible.
For changing the system of functioning, the decentralized computing powers require agreement on some changes. These changes are the greatest regard of the majority.
The transaction history can be seen either by personal nodes or by Blockchain explorers because of the decentralized nature of Bitcoin’s blockchain. Each node consists of the copy of the chain that gets updated as fresh blocks and after being confirmed and added to them. This can help the tracking of Bitcoin where it goes.
How can Blockchain be used?
It has been cleared that blocks of Bitcoin’s blockchain stores information about monetary transactions. It has been concluded that data storage can be done with other kinds of transactions also. Companies like Walmart, AIG, Pfizer, Unilever, and more are already involved with Blockchains for the purpose of storing their sensitive data. For example, IBM has developed its Food Trust Blockchain to track down the journey of food products when they reach their locations. Earlier many outbreaks have been witnessed that were the reason for people falling ill like- Listeria, e Coli etc. Before using the technology of Blockchain, it took 2 weeks to find out the source for these outbreaks.
When it comes to Blockchain it becomes easy to track the journey of the food products till they reach their destinations. I can track through every stop. Other than this, all other things can come to notice from which the food items come in contact. It will help solutions to develop faster for any problem that arises. Many other companies are also using Blockchain in this manner for different purposes.
Banking is the industry that is incorporated with Blockchains on a higher level. Financial institutions work for the working hours only, and for 5 days a week. If you deposit a check on Friday at 6 in the evening then you need to wait until Monday morning to check your bank balance. Even on business days, it takes at least 2-3 days for the verification to finally make any difference. In this case, Blockchain is the best way that can be adopted.
With the involvement of Blockchains, users can check their transitions in just 10 minutes. The only time that is being taken is for the block addition except for its national holiday. Another feature that is offered by Blockchain is the quick and secure exchange of funds between institutions. In the stock market business, fund clearance takes 3 days for settlement and clearing procedure, but in this case, it will be done quickly.
The Federal Reserve controls the U.S. dollars and the data and currency of people are ideally with the authority or the government. In case the bank of a user gets hacked then the data is at risk. In the case of 2008 multiple banks ran out of money that was bailed out moderately by using taxpayer money. There are some concerns regarding these situations that are faced by banks. In return, Bitcoin was developed. The network of computer systems of Blockchain allows Bitcoin to operate without any major authority. This way reduces the risk along with the additional translation fees. This will be giving stable currencies and more applications with a wider network of people separately to the countries having unstable currency infrastructures. It will be assisting both domestically and internationally. The saving accounts by using cryptocurrency wallets are beneficial for people having no state identification.
In terms of the health sector, health care providers can take advantage of Blockchain by storing the data of their patients in their respective medical records. The data will be stored into the blockchain after confirmation and get signed so that it would be confirmed that the record can not be manipulated any further. The data can be stored with a private key into the blockchain so it can be accessed by authorized people. This will be ensuring security and data privacy.
Have you ever witnessed the data stored in the office of Recorder? It’s complex and troublesome. In order to solve the disputes and any other related issues, a physical deed is required to send the government employee to their recording office. However, this process can be costly and time-consuming. There are chances of error as well if put manually. If there is any error then it will be inefficient and cost a lot to the related person as the data needs to be precise and correct. Blockchain will work the best in this case. It will reduce and eliminate the cause or error along with the way of physically making the record files and there wouldn’t be any need for scanning documents. The data will be verified by the blockchain and that will become trustworthy for the people.
In some countries, there are no recorder’s offices. In that case, it’s so difficult to prove somebody’s ownership of a property. Blockchain would do wonders if established in these kinds of areas.
This is the computer code for further providing, verifying, or negotiating a contract agreement. It works under a set of conditions. These conditions are required to get agreed upon by the users. These conditions also carry out with other terms and conditions as well. In cases like leasing an apartment, this would be working great with you. It works when you will be given the door code by the landlord and you will pay the security deposit.
The deal portions from both the parties- the tenant and the landlord will be sent to the smart contract and it will exchange the door code for the security deposit on the decided date when the lease will be supposed to begin. In case the landlord doesn’t provide the door code by the given date then the security deposit will be refined. This way will remove the additional fees of, a third-party- notary, mediator, or attornies.
Let’s take the IBM example again for a better understanding. Blockchain can be used for storing the information of items purchased by suppliers. It can further categorize into different labels such as ‘’organic’’, ‘’local’’, fair trade’’, and check the authenticity of the products purchased.
According to the report by Forbes, the adoption of blockchain by food industries has been increasing in order to track down the journey and safety of the food items throughout from farm to customer.
Modern voting systems can adopt blockchains primarily. Blockchain could be a boon for the voting systems. As it removes the fraud that takes place in elections and would enhance the voter turnout. It has already been tested in November 2018 midterm elections in West Virginia. Blockchain technology will eliminate the chance of tampering. Even in the electoral process blockchain will promote transparency and reduce the need to conduct elections and offer quick results. The other point is that it would remove the recounting system as there will be no chance of any error.
What are the Pros and Cons of Blockchain?
As far we have figured out the blockchains are designed in the decentralized form in order to function as a distributed digital leader. The data/ information stored in the blocks structured in the chronological sequence is correlated to cryptographic proofs. Every technology has its advantages and disadvantages. Blockchain also comes up with some disadvantages in various sectors. The decentralized form also brings some negative elements as well. In comparison with centralized form, blockchains offer limited efficiency and need enhanced capacity for storage. Let’s see what are the Pros and Cons of Blockchain-
The data of blockchains are stored in multiple computer systems that are spread network of nodes, computer systems and the information stored is resistant to any technical glitch or illicit activity. There is no chance of any glitch or failure as each node is a replica of the database. In the case of one node going offline doesn’t affect the security of the network.
The act of clearing the data from the blocks is extremely difficult. Once the data has been entered it is stored there permanently. In this case, financial data is secure to the very end. Any changes made to the data stored in the blocks are tracked down and recorded on a public ledger.
Let’s take an example to get to know this precisely, in a business blockchain technology is used to eliminate the chances of fraud done by the employees. Blockchain offers a secure record of the financial transaction which will keep the credibility above always. No changes or manipulation with the transactions can be done by any employee of the organization.
In the cases of payments, three parties are involved which include the two parties and an intermediary in the traditional payment methods. The intermediary could be anyone/anything such as a credit card company, bank, or any other payment provider. With the use of Blockchain technology, the intermediaries are no longer needed, as the transactions get verified through the process called ‘’Mining’’ by blockchain. The system of blockchain is recognized as a ‘’trustless system’’.
The consensus algorithm has been proved very efficient over the years as it protects the Bitcoin blockchain. However, there are still chances of getting attacked. Especially 51% attacks are the most dangerous ones. These attacks have the potential to disturb the entire network by manipulating the data.
Moreover, there was even a successful case of 51% attacks on the Bitcoin blockchains. With the growing network security is also enhanced. However, even if the 51% attacks get successful then it will only be able to manipulate the recent transactions because all the blocks are linked with cryptographic proofs. The Bitcoin blockchain is tough and not easy to break down. It is also quick in terms of responding to such attacks.
Once the data is stored into the blockchain it is extremely difficult to modify the data or make any kind of changes in that. However, the permanency of the data is an advantage of blockchain but it’s not always very beneficial in all cases. Modifying data is very time-consuming and tough to do.
In order to give users their ownership, blockchain uses public keys rather than their units of cryptocurrency. Evert blockchain has its respective private key. The address is sharable but not the private key. The private key is used for accessing the funds by their owners. In the case where users lose the private key then the money also gets lost and nothing can be done about this case.
Proof of Work is not efficient in any case. Mining is considered as taking up the high competition and every ten minutes there’s a winner. The resources used by blockchains have been boosting considerably over the years. It is consuming more energy compared to other countries, for example, Nigeria and Denmark.
Ledgers of blockchains can grow large with time. Generally, the Bitcoin blockchains take up to 200 GB of storage. In the case where this ledger grows too large then it has the chance to lose the node. As it becomes too large for any one to download or store.
Apart from the disadvantages, blockchain has so much to offer. Here is all that is necessary for you to know about Blockchain. It is very useful in some cases to eliminate fraud. However, as everything has its other sides blockchain too has it. It’s not that negative but it is considered a disadvantage. It often happens where something is too good, its negative points get covered up.