Blockchain: An emerging technology beyond secure digital transactions

#cryptocurrency #blockchain #smartcontracts #technology #iot

Shikhar Bhagoliwal Feb 07 2021 · 4 min read
Share this

What is a Blockchain?

Blockchain is a distributed ledger technology that records the digital asset and blocks connected through cryptography. It was first introduced in the design and development of cryptocurrency, Bitcoin in 2009 by Satoshi Nakamoto. This technology is based on the peer-to-peer networks, all nodes are focused on validating the records or digital transactions. Blockchain is a continuous process and there is no limit to the number of blocks. These blocks can be considered as transactions which can be bought and sold n number of times by multiple people.

A Broad Aspect of Blockchain

Each block in the chain contains date, nonce, transactions, previous hash, hash and every time a new block is made, its previous hash is saved in the new block. The hash algorithm can be anything such as SHA256, MD5, RIPEMD and many more. It is a revolutionary technology because it helps reduces risk fraud and brings out transparency.

 Bitcoins, XRP, Ethereum follow the concept of blockchain. The reason for the high price of the cryptocurrencies are because they are limited. The price fluctuations normally occurs because of government regulations.

Structure of Blockchain

The blockchain architecture comprises of:

  • Node: A computer within the blockchain
  • Transaction: It is the smallest building block of a blockchain system
  • Block: A data structure used for keeping a set of transactions which is distributed to all nodes in the network
  • Chain: A sequence of blocks in a specific order
  • Consensus: A set of rules and arrangements to carry out blockchain operations
  • A Single Block Information

    Blockchain can serve the following purposes for organisations and enterprises such as Cost reduction, history of data, data validity & security. There are multiple blocks in every chain and each block has three basic elements:

  • The data in the block.
  • A 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
  • The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely small).
  • It follows the concept of Avalanche effect where a slight change in the input results in significant change in the output.
  • When the first block of a chain is created, a nonce generates the cryptographic hash. The data inside the block is tied to the nonce and hash unless it is mined. 

    Use cases of Blockchain

    Blockchain has applications which are applied in various domains such as energy, smart cities, cyber security, media and so on. The ledger technology can be applied to track fraud in finance, securely share patient medical records between healthcare professionals and even acts as a better way to track intellectual property in business.

    5 PROMINENT BLOCKCHAIN APPLICATIONS TO KNOW

  • Secure sharing of medical data
  • Personal identity security
  • Anti-money laundering tracking system
  • Supply chain and logistics monitoring
  • Cryptocurrency exchange
  • There are several use cases through blockchain such as: Smart Contracts, Money transfer, IoT, Logistics, Media & Entertainment.

    Smart Contracts

    Smart Contracts in Blockchain, Image Source: Google Images

    A smart contract is a self-enforcing agreement embedded in computer code managed by a blockchain. The code contains a set of rules under which the parties of that smart contract agree to interact with each other. If and when the predefined rules are met, the agreement is automatically enforced. Smart Contracts inherits some of the blockchain properties such as they are immutable and distributed. The benefits that smart contracts offer businesses are: Direct dealings with customers, more trust, fraud reduction, cost efficiency, record keeping.

    Money Transfer

    Money Transfer Process using Blockchain, Image Source: Google Images

    Pioneered by Bitcoin, cryptocurrency transfer apps are exploding in popularity right now. Blockchain is especially popular in finance for the money and time it can save financial companies of all sizes. By eliminating bureaucratic red tape, making ledger systems real-time and reducing third-party fees, blockchain can save the largest banks $8-$12 billion a year, according to a recent article by ComputerWorld.

    IoT

    Companies using Blockchain and IoT, Image Source: Google Images

    IoT technology is the inter-networking of multiple physical devices and objects that usually consists of a network of sensors and non-computing devices that communicate with computers and devices through the Internet. Sophisticated chips, sensors, and actuators are embedded into physical items, each transmitting data to the IoT network. Some examples of industrial use cases may include the use of sensors to track environmental conditions, such as temperature, humidity, air pressure, quality, thermostats, heart rate monitors, sprinklers, and home security systems. 

    Logistics

    Interconnectedness of Supply chain using Blockchain,  Image Source: Google Images

    Blockchain-enabled IoT devices give logistics companies better insights into environmental conditions processes. As a result, businesses can securely and efficiently move their products all over the world. According to a survey, there is a lack of communication and transparency due to the large number of logistics companies crowding the space. There are major issues faced such as: data siloing and transparency issues. There is a significant reduction percentage of the profits due to inefficient practices, unnecessary middlemen costs, theft, cyber attacks and food spoilage. Blockchain focuses on making the business processes more efficient. 

    Media & Entertainment

    A Blockchain network in Entertainment Industry,  Image Source: Google Images

    One of the greatest issues in entertainment is ownership and rights management over content. Blockchain can help in solving the above problem, data rights, piracy and payments. Many of the media industry organisations deal with problems such as: data privacy, royalty payments and piracy of intellectual property. Blockchain can help in the media's ability to prevent a digital asset, such as an mp3 file, from existing in multiple places. Blockchain can help to improve the media supply chain and decrease copyright infringements by adding transparency, security and control.

    Conclusion

    Blockchain is an invention that was initially designed for the digital currency Bitcoin as it lets digital information to be distributed and secures it. However, the technology world has now found it useful in far more applications than this. It is using different mechanisms to secure a consensus on transactions, seen only by authorised users. As it follows the immutability rule, no one can delete any transactions, not even the system administrator.  Companies using Blockchain can be assured that they are receiving accurate and timely data, and that their confidential blockchain records will be shared only with network members to whom they have specifically provided access.

    Comments
    Read next