Blockchain – a technology that changes the world

Blockchain – a technology that changes the world

Blockchain review

Recent dawn on cryptocurrencies introduced a brand new technology to the world, in the form of encrypted distribution ledger called blockchain. It is recognized by many as a ground-breaking advancement that could disrupt numerous industries, from finance and insurance to music, mortgages, and accounting. Therefore, it’s no wonder that widespread use of this technology is highly anticipated by many visionaries.

Here, we’ll be analyzing the core concepts of blockchain technology, starting from the way it works and ending up with the potential appliance. Keep on reading and learn why this technology gains more and more popularity!

Blockchain | How it works

Although there were some earlier attempts of creating a blockchain, the first successful implementation is the birth of Bitcoin. Generally, all blockchains are bearing the same key concepts, and here we’ll try to give a brief overview of them.

Basically, blockchains are increasingly growing lists of records of any kinds, composed of main elements called blocks that are encrypted and put in a chain. Each block contains a hash, an output of the complex function that converts an input data to specific strings of letters and numbers. Each hash is actually a link to the previous block – this is how block inheritance is determined, thus rendering any chances of changing the already written list to zero. Apart from the hash, blocks also contain a timestamp of their creation, as well as some data specific to each blockchain. Blocks have a particular size, governing their ability to store data. When a block is filled to its full capacity, it gets added to the chain, and in the very same moment new, empty block is generated, ready to be filled with new information. This process is called mining, and it denotes a significant effort in solving complex mathematical tasks in order to verify transactions and data stored in the block. In other words, a highly capable computer device uses electricity in order to be the first one to solve mathematical puzzle, thus creating a new block, a new coin and collecting significant mining reward.

Blockchains give users the opportunity to exchange currency, services, data and all kinds of things without the need of a governing mediatory institution, such as a traditional bank. This is done by utilizing the concept of peer-to-peer network, which functions on the principle of unified consensus. All the data present on the blockchain is distributed among decentralized nodes, or wallets that are keeping user’s crypto coins safe. It is a form of a distributed database, and each change is reflected on all the nodes at the very same moment the change is saved or, in other words, a new block is attached to the chain. Without the centralized database, this ecosystem is more resistant to attacks, all data is publicly available and its originality unquestioned. Sounds great, doesn’t it? But there are many more advantages to this technology, as well as some cons – read on and learn all about them!

Blockchain | Advantages and disadvantages

Distributed ledger technology has its strengths and weaknesses. Its biggest advantage is undoubtedly decentralization – by distributing the data to everyone and syncing it in real time, there is no need for a third-party mediator. Furthermore, given the fact that the same “database” is held at each user, the chances of failure are dramatically decreased. Also, due to its immutability, the chain logs cannot be altered or faked without the full consensus of all users, raising the security level even higher. Public ledgers are showing all transactions to anyone, which guarantees full transparency to anyone. Transaction time is also dramatically increased – while interbank money transfers require a laborious and long-term process of validation and approval, blockchains tend to shorten the process to a matter of minutes or even seconds. This also has a positive impact on transaction fees, since there is no intermediary that requires compensation for its services.

On the other hand, blockchains are significantly slower than regular centralized databases, as each change must undergo a signature verification, consensus approval and requires much more computation power to sync each node. Furthermore, mining requires large amounts of electricity, making the sustention of the network costly. Scalability and implementation issues are considered problems as well, as well as questionable global acceptance and regulation. However, given the fact that the technology is still in its early stages, it is realistic to expect that all these issues will be taken care of in time. Now, let’s see where blockchains can find their appliance!

Blockchain | Application possibilities

When speaking about real-world application of blockchains, the possibilities are numerous. Smart contracts, offered by Ethereum, are enabling anyone to create decentralized applications for various purposes. Imagine Uber without having to pay transaction fees to your bank, or even have them incorporated in the final price of service. Or voting system based on blockchain, without any way of altering votes. Or food tracking platform that will make sure that what is served to you in supermarkets comes from the right vendors. Or cloud storage solutions with backups on every network node. There are already companies that are trying to change the music industry by allowing artists to sell their songs directly to their listeners. Mortgages, land title registrations, brokerage industry, energy distribution – all these and many other industries might surely profit from blockchain integration. You can see that the potential impact of blockchains is undoubtedly immense, so it’s safe to say that we’re at the very start of something truly big. That being said, it’s time to wrap this article up.

Blockchain | Conclusion

As you have seen, the technology of blockchains will surely change the world as we know it. The concept of distributed, encrypted databases might completely disrupt all major industries, so it’s highly recommended to keep an eye on the exciting world of cryptocurrencies. Also, you should definitely keep an eye on our other articles, as well as continue following us since we’ll be writing about crypto ecosystem more and more!

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Author: Ben Prescott

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