Updated at 2021-01-23 11:10:29 UTC
Blockchain is known as the backbone technology behind Bitcoin, and it is one of the most exciting and interesting technologies on the market today. Gartner estimates that the current combined value of cryptocurrencies in circulation worldwide is $ 155 billion and expects continued growth. Like the rise of the internet, Blockchain has the potential to truly disrupt multiple industries and make processes more democratic, secure, transparent, and efficient. Entrepreneurs, startups, investors, global organizations, and governments have been identified as a revolutionary technology.
Blockchain is a shared, decentralized public ledger that keeps a record of all transactions that take place over a peer-to-peer network. It contains the records of all transactions or digital events executed and shared among all participating parties. Each transaction in the shared ledger is verified and linked in the system by consensus of the majority of the participants. All records on the Blockchain are decentralized, immutable, and non-removable. This makes it a revolutionary way to authenticate and verify all transactions that occurred on the chain. By allowing digital information to be distributed but not copied, Blockchain technology creates the backbone of a new kind of Internet.
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Blockchain and Bitcoin
One of the biggest myths is that Bitcoin and Blockchain are the same, which is certainly not the case. Blockchain is the technology that allows the use of cryptocurrencies, a digital exchange medium that uses encryption methods to control the creation of digital currency and its circulation. Blockchain is the shared public ledger on which the entire Bitcoin network is based. All transactions once confirmed and verified are linked on the Blockchain. The integrity and chronological order of Blockchain are reinforced with cryptography. So, Bitcoin is an application of Blockchain, but Blockchain has potential applications beyond Bitcoin and cryptocurrency, which we will talk about in more detail later in this article.
A network of nodes
A network of computing "nodes" collectively make up the Blockchain. A node is connected to a Blockchain network and performs the task of validating and relaying transactions for each block of data on a Blockchain. A copy of the entire Blockchain is automatically downloaded to the node when it joins a Blockchain network. Each node is a Blockchain administrator and joins the network on a voluntary basis because each node has an incentive to participate in the network. The nodes compete with each other to solve computational puzzles (that is, any transaction). The nodes start with "Mining" to find the decryption key to validate the transaction. Mining refers to the distributed computational review process performed on each block of data in a Blockchain. This enables "consensus" to be achieved in an environment where neither party knows or trusts each other. First conceived for Bitcoin, mining is now recognized as the first of many potential applications of Blockchain technology. The Miners code provides the hashes that group the timestamped transactions into a block. It is estimated that there are more than 700 cryptocurrencies already active or in development with possible adaptations of the original Blockchain concept.
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A growing network of Blockchain nodes and emerging cryptocurrencies could be catalysts for the estimated increase in demand for interconnection from the banking and insurance industry. According to the findings of a recent report, published by Equinix, "The Global Interconnection Index", banking and insurance companies are expected to have the highest demand for interconnection bandwidth capacity by 2020, a 61% annual increase from 2016 to more than 955 terabits. . Interconnection bandwidth is a measure of the total capacity provisioned to exchange traffic privately and directly with a diverse set of counterparties at distributed IT exchange points, a critical factor for securely interconnecting Blockchain nodes and delivering a fast data exchange between those nodes.
The idea of decentralization
Blockchain is a decentralized, but interconnected technology: everything that happens in a Blockchain network happens to the network as a whole. This has some important implications, for example making the traditional way of verifying transactions unnecessary - in other words, it is a more distributed than centralized process. Since any new transaction is visible to all Blockchain participants, that transaction will only be added to the Block chain after miners have finished verifying and authenticating it by consensus. This is achieved through the wide range of nodes, mentioned above, that use Blockchain technology in collaboration to manage the database in which all transaction records are kept. These multiple node networks are not managed by any central authority, but rather operate as equals.
The decentralized nature of Blockchain also means that it has no single point of access or central authority. That plays a vital role when it comes to cybersecurity. In a centralized network, hackers can perform cyber attacks such as shutting down networks, altering data, spoofing identities, luring users to cyber cheats, etc. They do these things simply by targeting central repositories and single points of failure.
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Blockchain's decentralized approach to storing and sharing information on a ledger is the way to avoid all security threats. The same technology allows secure transactions with cryptocurrencies such as Bitcoin.
Here are several possible Blockchain applications, by sector or topic:
Financial services: Faster and cheaper settlements could save billions of dollars in transaction costs, while improving transparency. Blockchain's encryption properties allow insurers to securely capture ownership of the assets to be insured.
Automotive: Consumers Could Use Blockchain to Manage Fractional Ownership in Self-Driving Cars.
Voting: Using the Blockchain code, voters could cast their votes by phone / computer, resulting in immediately verifiable results.
Healthcare: Encrypted patient health information can be shared with multiple providers, without the risk of a privacy breach.
Decentralized Notary: Time stamp is an interesting feature of Blockchain. Basically, the entire network validates the state of a wrapped data (a "hash") at a given time. As a decentralized, trustless network, it essentially confirms the “existence” of a document or information at a certain time that can be proven in a court of law. Until now, only centralized notarial services could fulfill this purpose.
Smart Contracts - These are legally binding programmable digitized contracts entered into the Blockchain. The developers implement legal contracts as variables and statements that can release funds using the Bitcoin network as an "external executor", rather than relying on a single central authority.
There are several widely accepted benefits of Blockchain, including:
Disintermediation and exchange without trust: two parties can carry out an exchange without the supervision or intermediation of a third party, strongly reducing or even eliminating the counterparty risk.
High-quality data - Blockchain data is complete, consistent, timely, accurate, and widely available.
Durability, Reliability, and Longevity: Due to decentralized networks, Blockchain has no central point of failure and is better able to withstand malicious attacks.
Transparency and immutability: Changes to the public Blockchain are publicly visible to all parties, which creates transparency, and all transactions are immutable, which means that they cannot be modified or deleted.
Ecosystem simplification - Adding all transactions to a single public ledger reduces the clutter and complications of multiple ledgers.
Lower transaction costs: By eliminating external intermediaries and overhead costs for exchanging assets, Blockchain has the potential to greatly reduce transaction fees. According to online news agencies LTP and Fintextra, "Blockchain has the potential to reduce the cost of infrastructure by up to $ 20 billion a year."
How Greater Interconnection Boosts Blockchain
Digital wallet transactions, such as those carried out through the Blockchain, require a direct and secure interconnection. An Interconnection Oriented Architecture ™ (IOA ™) strategy enables a successful digital wallet transaction, as it is essential for businesses in the digital wallet space to be as close as possible to their dispersed digital wallet partners and users.
An IOA framework shifts IT infrastructures from a centralized to a distributed approach that increases proximity to all the elements required to complete the highest performing digital wallet transactions possible. Since the growth of the interconnection bandwidth capacity n increasingly critical for banking and insurance companies, an IOA can enable them to maximize their ability to take advantage of performance, scalability, and security when conducting critical data exchanges such as Blockchain.