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Technology has taken businesses to the next level, and one such rising technology is blockchain. Blockchain technology is excellent for delivering information. It provides quick, shareable, and transparent information kept on a distributed ledger and can only be viewed by network users who have been given access. The technique was first introduced in 1991, but it got a boost when Bitcoin started using it in 2009. It is a record-keeping technology for cryptocurrencies. It is a database where the data is circulated among several computers which are connected to the network.
Definition of Blockchain
Blockchain is a combination of two words- block and chain, and thus, it is a chain of blocks that contains information. It is a network of one-on-one nodes that keeps transactional records (blocks) of the people in different databases (chains). For this, a digital ledger is created to store the data. The owner of the block signs digitally for every transaction by verifying and protecting from hackers. Accordingly, the information remains safe and free from tampering.
How Does Blockchain Technology Work?
A blockchain consists of three elements:
- Data: The blockchain’s size determines the amount of data recorded in each block. Usually, transaction, sender, receiver and account details are stored.
- Hash: Each block has a different hash code. If there is a change in a block, then the hash will also change. You can detect changes to block with the help of hash.
- Hash of the previous block: Every block is connected, creating a blockchain. If someone hacks a block, then the computer changes the hash code. It helps reduce the errors of other blocks and makes them invalid because of the code change.
Every exchange of information is a record of data which creates a block. These exchanges are sent to every computer node in the network, and the block can store it. Computers that validate and process blockchain transactions are known as miners. Each block is connected to the previous one, but every block has its secret hash code, nonce, and the last block’s hash. So, when the data transfers from one block to another, these blocks form a data chain. Therefore, it turns into an irreversible chain of exchanges. Each progressive block improves the past blog’s confirmation and forms the blockchain.
Blockchain Technology – Criticisms and Challenges
- High consumption of energy: The biggest challenge with blockchain technology is energy usage. Mining will require you to use your computer to solve complex equations. When you start mining, the system needs more and more electricity to overcome this predicament. As a result, it has become one of the network’s key challenges.
- Scalability issues: Scalability is the major problem that arises when deploying blockchain. Blockchains are good for small users. When the user number increases, the transitions take longer to process. The transactions cost higher than usual, restricting more users on the network, and the entire transaction may take many days to complete. While some blockchain systems did produce speedier results, they also slowed down as more users logged in.
- Interoperability: Organisations cannot send and receive data from another blockchain-based system, and thus, most blockchains operate in silos and do not communicate with other peer networks.
- Insufficient skills: Blockchain technology is still in its early stages, so you need to have qualified staff to administer blockchain technology in addition to software and hardware. There is a huge demand for blockchain experts.
- Public awareness: The absence of knowledge of blockchain technology among people is a huge barrier. Most people are still unaware of the technology’s existence and possible use. This niche is also unpopular due to a lack of adequate marketing.
Internet Technology vs Blockchain Technology
Information Technology | Blockchain Technology |
You can safely exchange information with your choice of party. | You may safely connect with anyone to share value, but everyone on the network must watch the value exchange. |
It focuses on information sharing. | It focuses on the exchange of value. |
Data is centralised. | Data is decentralised. |
Internet technology continues to use the double-entry bookkeeping approach. | Blockchain technology uses a digital or distributed ledger. |
Involvement of third-party. | No involvement of third-party. |
Keep records of legal currency. | Keep records of digital currency. |
Conclusion
Blockchain technology intends to timestamp digital transactions so that it cannot be tampered with. It allows you to record and distribute information but not edit it. The technology is evolving faster while managing its challenges. Many businesses want to develop or use this technology, as this can be seen as the future of India. With the introduction of 5G, blockchain will expand its range of applications in finance, data processing, and the Internet of Things.
