Blockchain for beginners

Blockchain, a boon?

Anonymity was one of the greatest needs of a technology user be it in the form of applications which allow us to perform all sorts of day to day life tasks over our mobile devices and appliances, finance management, to keep our money away from prying eyes and protect it from the theft of any kind.

Overall, we needed technology which would allow us to make our presence in any network safe and secure. Then came along blockchain when a person by the name of Satoshi Nakamoto brought it to us.

Blockchain?

Blockchain technology is a type of distributed ledger technology (DLT) — It is an accounting system where the ledger (record of transactions) is distributed among a network of computers. To explain this better, we must understand the few characteristics blockchain comprises of.sevr

Essentially,

Each ‘Block’ records several transactions, like a page in a record-keeping book. The amount of transactions on a block varies from blockchain to blockchain. For example, each block on the Bitcoin blockchain holds up to 1 megabyte of information.

And each ‘Chain’ is recorded in the form of hashes — strings of numbers and letters. The hash of each transaction is generated to include information from the current and past transactions. This creates a chain effect where the order of hashes cannot be changed. As a result, transactions are immutable once they’ve been added.

All transactions (exchange of information) need to be verified before they are added onto the blockchain. This is done through a consensus mechanism, which allows all the nodes on the network to agree on things without an authority. This is how blockchains stay autonomous and decentralized.

How is it secure?

In the case of blockchain, the value returned by the hash function, or just hash, is used to protect the data contained in the block not altered by any participant in the intentional network. This value cannot be equal for two different data sets, and the original data should not be easily attainable through reverse engineering techniques applied to the hash.

That is, from the data, we can generate the hash, and from the hash, it should not be possible to generate the data. Security premises must be ensured by the algorithm used by the chosen function.

Who’s using blockchain?

Countries from every spectrum

Among the countries that have adopted blockchain-based solutions on a large scale, Estonia is a shining example of how blockchain can bring efficiencies in governance and ease of doing business. Estonia has used the KSI blockchain for various e-governance services. The blockchain is reportedly used in various Estonian digital services such as digital health records, prescription database, judiciary, law & order, banking, business registration, and land registration.

China, the second-largest economy in the world after the United States is using blockchain technology as well. There are some banks in the country such as the Bank of China or the China Construction Bank that are analyzing the possibility to implement blockchain solutions.

Multiple-use cases

As stated, not all blockchains are decentralized. A blockchain could be public, private, permission-based, and/or a combination of these as one protocol could be integrated at the top of another. Consider Facebook’s Libra, for instance. Unlike Bitcoin, and many other cryptocurrencies, Libra, despite being based on the Libra blockchain will be controlled and monitored by Libra Association. This association includes Facebook and its member companies who are looking to make a profit and not run Libra as a non-profit cryptocurrency such as Bitcoin.

This customization, however, makes blockchain so versatile that the technology is now increasingly used for numerous non-fintech applications as well. To name a few — — storing medical records, concluding binding agreements, tracking the flow of goods, storing personal credit records, land registry, and even verifying facts in the light of the fake news epidemic.

To sum it up,

Given the right direction, the future of blockchain tech is not only brilliant but much-needed addition to the way our society evolves from an offline to an online one where security and anonymity are tantamount to our safety on any of the respective platforms we use daily.

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