In the last few years, if anyone is even remotely connected to trending technologies of the future, then they must be quite familiar with the words, like cryptocurrencies or blockchain technology, bitcoin and several similar terms. So typically, cryptocurrencies like bitcoin are based on blockchain technology but what exactly does the term “Blockchain” entail.
To understand this word, we have to first know the concept of database, peer-to-peer(P2P) topology and Distributed Ledger Technology (DLT).
Database: Database is typically a systemized way of collecting data, or information, used for rapid search and retrieval by a computer, whenever required.
peer-to-peer(P2P) Topology: P2P topology refers to a distributed network of typical computer systems formed when two or PCs are connected to share resources through a USB and without going to a separate server computer.
Distributed Ledger Technology (DLT): Also known as a shared database, this is a type of digital system used for storing and recording a transaction of assets and the details stored are easily accessible to anyone since the data recorded is stored at multiple places or system. Here, the distributed ledger does not have a centralized administration functionality.
With the basic term’s introduction over, we can finally proceed to our main topic of discussion, that is, Blockchain Technology.
Blockchain can be defined as the type of decentralized distributed ledger technology where the data is stored globally in the form of blocks which are then chained together once data is filled in those blocks.
Typically based on P2P topology, blockchain works in a decentralized way making the data accessible on the network for everyone to see everyone else’s entries in near real-time. Because of this, it difficult for one user to gain control of the network.
Secret of Blockchain’s Popularity
Now, since we understand the term blockchain, we have to proceed towards the main question we all are curious to know like what makes it more popular than the existing technologies or why do we need blockchain in our lives?
Let’s focus on a real-time example to grasp this:
Assume a person has to make an online transaction to transfer his money to his family account. He logged in to his online banking account and transferred the amount to the other person using their account number. Once the transaction is completed, his bank updated the transaction records. It seems simple enough, right?
But what if someone is trying to hack your account to get those details?
Since the database used, consists only of one or at most two systems, it is fairly easy for the hacker to steal your transaction details and use it for his malicious use.
In this type of scenario wouldn’t it be better if multiple systems were connected to this process making the stealing quite difficult and complex to hack somehow?
That’s the secret of blockchain’s popularity and why it is considered to be trending right now.
Blockchain avoids the long process of storing and recording details of transactions done and facilitates the faster movement of the transaction, thereby saving both time and money. And since the data is distributed across the network, the hacker has to fight against every system to get past its security to get those details, thus making stealing quite impossible or complex and tedious task, to say the least.
And because decentralized blockchains are immutable or unalterable, the data entered is irreversible and so is accessible to everyone involved so the option of negating any knowledge of transaction details recorded cannot be falsified.
Perks of Blockchain:
High Speed and Efficiency: Ensures quick transaction processing in an efficient way that might take several days if other technology.
Secure and Reliable: Due to its decentralized database processing, it is quite difficult for a hacker to hack multiple systems, making blockchain practically hack-proof system resistant to hacking attempts, theft, or forgery. Because of which it is highly trusted compared to others.
No Intermediaries Involvement Required: No third-party interference is required like brokers, agents or back-office help, to process transactions.
Transparent and Open: Information stored in blocks can be easily accessed and checked to confirm transaction validity by anyone, thus eliminating the case of fraud.
Accuracy: Data stored is firstly checked and verified before being recorded every time by the system. Also, human errors and typos get constantly checked automatically, making the Blockchain data highly accurate.
Limitations of Blockchain:
Scalability Issue: Cannot store a large amount of information and also limited transaction per node can happen only.
Volatility: Being new to the market, many financial institutions don’t trust the technology too much making it highly volatile.
Private Key Issues: With every user connected to the distributed network, every user has his/her private key to get access, but if somehow the key gets lost, the process becomes a failure in that case.
Scope and Companies Related to Blockchain:
Smart Contracts: Self-Automated Programs to carry out the terms of a contract are called smart contracts. With Blockchain technology, users can use smart contracts to easily form an agreement without any unnecessary delays.
- ChromaWay: Company delivers smart contract solutions for industries like real estate and finance.
Equity Trading: Because of blockchain’s high transaction speed and accuracy, it will be highly useful in selling and buying stocks.
- Robinhood: It’s a stock brokerage app that lets users buy and sell stocks, ETFs and cryptocurrency. The company recently entered the blockchain realm by letting customers invest in everything from Bitcoin to Litecoin
Payment Processing and Money Transfer:
- Circle: Company offers online money transfer and cryptocurrency investment platforms. Friends can easily transfer money in different currencies with a simple text without and exchange rate fees.
E-commerce and Gaming: Blockchain can offer a fast, reliable and secure system to an e-commerce ecosystem making it the first choice for usage. Also, it can be used in the gaming industry with its wide applications.
- OPSkins: Company offers an online trading platform for gamers to buy and sell virtual accessories and items.