Bitcoin has been a very popular topic in the last few years, along with bitcoin, you must have read or heard the term blockchain technology many times, because bitcoin and blockchain technology are closely related. You must have also tried to know about Blockchain Technology – Its Functions, Types and Examples.
If you are reading this article, it means that your search for blockchain technology is not over yet. You may feel like blockchain technology is a simple thing but it has a fictional meaning it has no real meaning which can be easily understood by the common man. By reading this article, your search will be complete because here complete information about Blockchain Technology – Its Functions, Types and Examples will be provided.
Blockchain Technology – Its Functions, Types and Examples
Right now the pace of blockchain adoption is very slow but technology experts believe that the pace is going to pick up in the coming times as this technology is going to change the whole world in the future. As blockchain technology is increasing in our life, it is becoming user friendly, in future our life is going to be based on this technology, so it is the responsibility of all of us to learn this evolving technology.
Through this article, I have tried to provide all the information about this new blockchain technology which you have not yet got to read. If you are new to blockchain technology then you are reading absolutely right article.
Here you will be provided all the information related to blockchain technology. In this article you will be told what is blockchain technology? How does this work? How many types are it? Where is it used? Why is it important? And what are its examples.
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What is Blockchain Technology?
Blockchain technology is not just a technology, but a platform. Some people also call it DLT i.e. Distributed Ledger Technology. Through this platform, record of anything is maintained by making it digital.
Blockchain is a way of recording information or it can be said that it is a digital ledger, blockchain is a digitized, decentralized, public ledger. In addition, blockchain technology makes it impossible or difficult to change, hack, or manipulate the system.
It was used in bitcoin in the year 2009. Transactions in digital currency are visible on every computer connected to this technology. The good thing is that it is a secure and decentralized technology, which is not possible to hack. It is also not possible to change, erase and destroy it.
Blockchain technology is a platform where anything can be digitized and recorded, not just digital currency. Whatever transaction goes through the blockchain, it is visible on every computer connected to the chain. It is called the backbone of cryptocurrencies. But it is not only used in crypto currency but also in many other areas.
Block and chain = blockchain. It simply means that the technology operates by chaining multiple blocks together. It collects data blocks to form a chain. The data is contained in separate boxes and they are linked. A long chain is formed, new figures are added. Similarly all the blocks are connected.
Who invented Blockchain Technology?
A person named Satoshi Nakamoto invented Blockchain Technology in the year 2008, whose purpose was that he could do it in cryptocurrency bitcoin, according to his public transaction ledger.
Satoshi Nakamoto's main motive behind doing all this was that he wanted to create a decentralized bitcoin ledger—the blockchain—that would give people the ability to control their money so that no third party, or anyone, could even That even the government cannot monitor this money.ted.
The great people of the technology sector say that in the year 2011, Satoshi, the creator of bitcoin suddenly disappears, and leaves behind this open source software that bitcoin users can use,update and improve.
Many people believe that there is no person named Satoshi Nakamoto, it is just a fictional character. By the way, no correct information is available about its veracity.
The invention of the blockchain technology is the first digital currency that solves the double spending problem without the help of any trusted central authority or central server. So this blockchain technology has been an inspiration for many other applications as well.
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Why should know about Blockchain Technology?
There are millions of searches every month on the internet about blockchain technology, why do so many people want to know about blockchain technology? There are three main reasons to know about blockchain technology. Which will be explained below-
1. There is no requirement for blockchain technology to exist publicly. It can also exist privately - in a private network where nodes would be mere points and the blockchain would act like a distributed ledger.
Financial institutions have to demonstrate regulatory compliance, so financial institutions are under a lot of pressure. For this reason, many organizations are implementing blockchain. Secure solutions such as blockchain can become a huge and important building block in reducing compliance costs.
2. The reach of blockchain technology is not limited to finance only. It can be implemented in any multi-step transaction where traceability and visibility are required. Supply chain is a notable case where blockchain can be used to manage leverage and sign contracts and account for the provenance of a product.
Along with this, it can also be used for voting platform, title and deed management. As the digital and physical worlds converge, the practical applications of blockchain are also gradually increasing.
3. The exponential and disruptive growth of blockchain can only happen when public and private blockchains come together (merge) in an ecosystem where firms, customers and suppliers can collaborate together in a secure, auditable and virtual way.
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Why is blockchain popular?
When we transfer money from our bank account to our family or friends. You log into online banking and transfer funds using the other person's account number. When a transaction occurs, your bank updates the transaction record. It sounds simple enough,
Such transactions can be tampered with. Those who are aware of this fact are often wary of using this type of transaction, so third-party payment applications have developed and blockchain technology has been increasingly used in recent years.
As already mentioned, technically blockchain is a digital ledger, which has become a topic of much discussion these days. Record keeping of data and transactions is an important part of business which is done by blockchain technology.
Due to the use of blockchain technology, bank transaction work avoids a lengthy process and enables fast and secure transactions, saving both time and money.
Some people think that blockchain and bitcoin are one and the same and can be used interchangeably, but in reality this is not the case. The use of blockchain technology has been able to support many industries such as supply chain, finance, manufacturing, etc. But bitcoin is one currency that relies on blockchain technology to be secure.
Blockchain technology is a very fast emerging technology all over the world which has many advantages for use in the digital world:
Highly Secure
Blockchain technology uses a digital signature to conduct transactions, which makes it fraud-free. Without that secure digital signature, it becomes impossible for any other user to alter or commit fraud on a person's data.
Blockchain technology is a very secure platform for transactions. Due to high security, people's trust towards it is very fast.
Decentralized System
Traditionally, transactions from governments or banks have to go through a regulatory system, but with blockchain, transactions are done with the mutual consent of users and do not have to go through much of a regulatory system, resulting in Transactions are easy, secure and fast.
Automation Capability
It can generate automation actions, events and payments under programming. All these actions can be arranged automatically when the criteria of the trigger are met. There is no need for any third party contribution to do this.
Functions of blockchain technology?
In recent years, blockchain technology has been used in many businesses around the world. Now it is more important for all of us to know that how exactly does blockchain technology work? Is this technology very important to us or is it a simple addition? Blockchain is not yet fully known but has the potential to be revolutionary in the future.
Blockchain is not the name of a any particular technology, it is a combination of three major technologies, which have been mentioned below-
1. Cryptography
2. P2P Network (Peer-2-Peer Network)
3. Computing program
There are two types of keys in cryptography- 1. private key and 2. public key. With the help of these keys, there is convenience in making successful transactions between two parties. It is used as a secure digital identity. This secure identity is one of the most important aspects of blockchain technology. In cryptocurrency, this identification is also known as a 'digital signature'.
Although there are many varieties of blockchain, they mainly fall into two categories as mentioned above – public and private. Public blockchains give anyone the opportunity to send transactions as long as they are part of this consensus process.
Digital signatures are merged with peer-to-peer networks; A large number of individuals who act as authorities also use digital signatures to, among other things, reach consensus on transactions.
When both parties authorize a transaction, it is authenticated by a verification method that is mathematically based, resulting in a successful secure transaction between two parties connected to the network. To do this, cryptography keys are used that allow blockchain users to conduct various types of digital interactions on peer-to-peer networks.
How many types of Blockchain?
Although there are many types of blockchains, but I will discuss about some special blockchains here. I hope you have not read such a systematic article about blockchain yet. Now below I am going to tell about the types of blockchain-
1. Public Blockchain
Bitcoin and other cryptocurrencies originated from public blockchains, and distributed ledger technology (DLT) has also become very popular because of public blockchains. This type of blockchain network also helps eliminate some of the challenges such as loopholes, security, and centralization. With DLT, other data is also distributed in peer-to-peer networks.
Proof of Stake (PoS) and Proof of Work (PoW) are two methods often used to verify the authenticity of information. It is a consensus algorithm that is often used for consensus.
2. Permissioned Blockchain
Sometimes called a hybrid blockchain, a permissioned blockchain is a type of private blockchain that allows exclusive access to authorized users. Organizations typically set up this type of blockchain, and it enables finer structure when specifying who can participate in the network and in what transactions.
3. Private Blockchain
Private blockchains work great for private businesses and organizations, as they operate on closed networks. Companies use blockchain to customize their access, network parameters, authorization preferences, and other important security options. In private blockchain only one authority manages a private blockchain network.
4. Hybrid Blockchains
In hybrid blockchain, both public and private blockchains work together. In a hybrid blockchain, some parts of the blockchain are public and transparent, while others are private and accessible only to authorized and specific participants.
This hybrid blockchain is used where there is a need for a balance between transparency and privacy. For example, in supply chain management, several parties may have access to some information, but sensitive data may be kept private to others.
5. Sidechains Blockchain
Sidechains are separate blockchains that operate in parallel to the main blockchain, allowing the functionality and scalability of other blockchains. This blockchain allow to developers to experiment with new features and applications without affecting the integrity of the main blockchain.
Sidechains are used to handle load sharing of transactions of the main blockchain to increase scalability. It is used to reduce congestion and create decentralized applications and implement specific consensus mechanisms.
6. Consortium Blockchain
Both public and private components operate in the consortium blockchain. A single consortium blockchain network can not manage by multiple organizations. Initially setting up this blockchain was a lot more complicated, but once it is up and running it provides great convenience. Consortium blockchains are very suitable for collaboration with multiple organizations.
How Secure is Blockchain?
Well, nothing is very secure in the world of internet. But blockchain technology is largely untraceable compared to other technology. To do any transaction through blockchain, all the nodes of the entire network have to agree, only then any transaction is valid.
Well, nothing is very secure in the world of internet. But blockchain technology is largely untraceable compared to other technology. To do any transaction through blockchain, all the nodes of the entire network have to agree, only then any transaction is valid.
To hack a system equipped with blockchain technology, it will not happen by hacking any one system of the bank, but all the systems of the network will have to be hacked, so it is not so easy to hack the blockchain system.
The blockchain does not have a single computer, it consists of many computers connected to it and its computing resources are enormous, which provides great security to these systems.
Applications of Blockchain Technology
Applications of blockchain technology in future or at present are discussed below-
1. Asset protection
If you want to protect your assets through blockchain technology, then this technology will provide security to your assets by creating an indisputable record of your real-time ownership.
2. Smart Contracts
If a large company relies on large contracts such as insurance, financial institutions, real estate, construction, entertainment, and law, all of those industries can benefit from this technology and be free from security concerns.
With the help of blockchain technology, all your contracts can be updated, managed, tracked and secured without any disputes. Smart contracts that are embedded with if/then statements that do not require the involvement of an intermediary party to be executed.
3. Personal Identification
Governments manage a lot of data of the people of their country such as personal data, birth and death records, marriage certificates, passports and population records etc. Through blockchain technology all these data can be easily managed according to the streamlined solution and stored securely.
4. Payment processing
The most important feature of blockchain technology is that it makes any type of payment process very easy. It completely eliminates middlemen as we often see in payment processing these days.
5. Supply Chain Management
Blockchain is a great option to manage all these processes whenever a value changes or an asset's state changes.
6. Crowdfunding
If compared to traditional crowdfunding, blockchain crowdfunding is a more secure investment. Funding by blockchain is mainly in the shape of bitcoin or other cryptocurrencies.
Blockchain Technology Opportunities and Advantages
Now let us try to find out what opportunities and benefits blockchain technology provides us.
- To interact better, blockchain provides security and help to our smart devices to communicate with each other.
- Blockchain solves the problem of manipulation or duplication. It brings all things to their highest level of accountability.
- Nowadays we can see a lot of our own data online because blockchain makes online identity and reputation decentralized.
- Cryptocurrencies provide the ability to control the government and the general public as well, nothing can be hidden or black. Because of this, now no one person will have control over the value of currencies.
- In an informal economy, blockchain protects us from intermediaries, so that asset can be exchanged easily and freely.
- Many issues related to censorship, freedom, jurisdiction and regulation can be addressed properly and smoothly with the help of blockchain technology.
- Due to blockchain based systems, there is no longer a need to keep middlemen, rather the records and transfer of assets can be easily taken care of on their own. Due to which the speed of transaction increases and it remains confidential from the other.
- Once data is recorded in the blockchain, those data become immutable, which can no longer be changed by any other person in any way, which can lead to fraud. Also, there is no mistake in the transactions, they are very clear, which can be easily checked and audited later.
Criticisms and Challenges of Blockchain Technology
Although there are many advantages of Blockchain Technology but it also has some drawbacks which we are going to discuss below:-
Lots of power needed
The operation of blockchain requires a lot of computing power, which requires more electricity. It is not so easy for any developing country because they also have many needs of their own. That's why it can be used very easily only in developed nations.
Transaction speed
Transaction speed can be a bit slow because we know that it is very important to verify blocks for security in blockchain from distributed network and it can take a lot of time to do so.
Security of private key
The private key is used as a signature in the blockchain, so it must always be kept secret because if third parties get to know about it, then the control of all your bitcoins has passed into the hands of others.
The private key should always be kept secret and backed up because if it is lost once then no one else can recover these funds and they will be lost forever.
Future of Blockchain
We have understood what is the utility of Blockchain and how it can be used in all our work. It can store all types of information. This information can be easily accessed.
Some organizations are against it because it is not very easy to implement all these functions, how to organize blockchain information and how to maintain our records-keeping infrastructure.
People may not accept blockchain technology very easily and this moment is not going to come suddenly as it challenges traditional technology at every step.
In the internet world, we all have seen criticisms before, initially there is a lot of criticism, but after implementing it there is a lot of improvement and in the end everyone understands its importance. Even understanding blockchain is taking time. But it will definitely be adopted in a few years.
Conclusion
Dear reader, in this article, we have learned in great detail what is Blockchain Technology, what are its functions, how many types it is and where it is used, etc. Complete and important information about Blockchain has been given. Hope you guys have got complete information about Blockchain Technology – Its Functions, Types and Examples.
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