In January 2009, a similar thing happened when the bitcoin was created, but here the bulb is bitcoin and the electricity is Blockchain. Now, let's see what blockchain is capable of.
What is Blockchain?
Blockchain is simply a chain of blocks. It is sort of a time-stamped series of blocks containing data. Each block has a memory pool and thus specific data is stored inside the block. All the recent data, which hasn't been entered in the previous block, is entered into the new block and this new block is added to the chain. When the entered data in a block is of recent transactions that have occurred in a network, blockchain acts as a digital ledger.
The idea of blockchain was first conceived by Stuart Haber and W. Scott Stornetta. They first introduced time-stamping of digital documents using strong cryptography, so that they couldn't be backdated. Later, Merkle trees were incorporated to increase the amount of data to be stored in a single block. In 2009, Satoshi Nakamoto published the bitcoin whitepaper leveraging blockchain technology in his digital cash system 'Bitcoin'. However, he mentioned 'block', 'chain' as two different words in his whitepaper, as it gained popularity, it is made into a single word.What makes blockchain so special?
These three important properties of blockchain make it unique- Decentralization
- Transparency
- Immutability
Dencentralized
Let's consider a website/service on the internet. All the information of that service is stored in a centralized server and any information you need about it should be accessed by interacting with this server.
An example of a centralized system is a bank, if you want to find your balance in your bank account, you should go through the bank server.
But in a decentralized system, thanks to peer-to-peer technology, anyone can store and share the information. Any individual can opt to connect to the blockchain network, in doing so he receives a copy of the whole blockchain and is called the nodes of the network. As a new block containing data is added to the blockchain, everyone on the network will be updated about it. This network is spread across millions of computers in the world and any node in this network can provide you the information you need.
Transparency
Blockchain gives you privacy, it is secure and transparent. How is it possible? Well, it's transparent to some extent. If you send bitcoin to someone, your name or identity won't be recorded on the blockchain, instead, you will see your public address "1J62bDK7XH2J48WgCaHUPFxDHykedGoJY6" sent xx bitcoins or received yy bitcoins. As we have discussed, every node in the network has a whole copy of blockchain data, and you can present them as your own website.
There are several websites that are known by block explorers. One such website is BTC.com, you can search the above given public address and find the transactions that happened till now. You can generate a unique public address for every single transaction. This public address doesn't correspond to entities in the real world thus making a blockchain private and secure.
Immutability
Once the data is entered into a blockchain it is unchangeable forever. Because of the decentralized network, even if you want to change a single piece of data, you must be capable of changing them on all the copies present at all the nodes on the blockchain. And every block has a unique id known as Block Hash. Block hash is generated by a hashing algorithm. Changing the data in a block results in the change of block hash. Every block contains the hash of the previous block too. If you have changed the data in block number 10, it would result in a change of hash of that block and previous blocks too but since block 11 contains the hash of block 10, the change is denied. Thus, blockchain acquires immutability.
No node is superior to another, all the nodes have the same privilege. The nodes in the network don't know each other right! How do they trust each other? Well, a consensus algorithm is employed to make sure all nodes agree on a single data value thus facilitating them on adding blocks to the blockchain. The most common consensus algorithms are Proof-of-Work and Proof-of-Stake.Since, we have discussed what a blockchain is, let's take a look at how the bitcoin blockchain works...
Consider a bitcoin transaction where Alice sends 2 bitcoins to Bob. This transaction would be recorded in the most recent block. All the transactions in the block are verified by all the nodes and a block hash will be generated by the node depending on their mining ability by the proof-of-work mechanism. This is known as bitcoin mining, where nodes will be rewarded in bitcoins for creating a new block. This reward is called the bitcoin block reward. Block reward as of now is 12.5 BTC, it halves every 210000 blocks created or every four years.
Bitcoin is just one of the applications of blockchain technology. Many other cryptocurrencies are leveraging blockchain technology such as Ethereum for smart contracts, Steem for decentralized social media applications. The World Bank estimates over 400 billion USD in money transfers for International remittances, finance can use blockchain technology to full capacity. And there is a high demand for blockchain developers at the moment.
Distributed ledger technology makes many use cases in the real world and also the level of transparency provided by a blockchain makes it a democratic technology.Blockchain has the capability to disrupt the financial sector and quick adoption of blockchain technology is necessary for any business to sustain itself in this competitive world.
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