Demystifying Blockchain technology

Blockchain is one of the most booming technologies of today’s world. Some experts are comparing blockchain technology to become as revolutionary as the internet. One of the main reasons for this rise in the interest towards blockchain is the sudden rise in popularity of cryptocurrencies after the Covid pandemic hit and people lost trust in their respective currencies which are working on the principle of blockchain.

Blockchain technology was described in 1991 by the research scientist Stuart Haber and W. Scott Stornetta. But it has started blowing up in recent years only.

But what actually blockchain is? You will find the answer to this question after going through this blog.

First of all let’s breakdown the word blockchain into block and chain. As the name suggests, data is created and distributed among various blocks and are joined by an imaginary chain. Each block contains information of transaction and the codes of preceding and succeeding blocks. This makes the blocks immutable and safe from fraud. Blockchain maintains a digital ledger of transactions which is divided in different nodes. Hence any single node cannot change or register a new transaction. This security is one of the most fascinating things about this technology. Blockchain brings trust, accountability, and transparency to digital transactions.

We are not bound to trust any central authority with our money, as the blockchain technology is decentralized and no one is having a complete control over our wealth. No single individual can change any transaction detail but all the nodes in the system are responsible for approving a transaction. If someone wants to change the information in the blocks, He needs to have access to at least 50% of the nodes, Which is almost impossible.

Due to these properties, blockchain technology is being heavily accepted in today’s world.

Some people have also started investing in blockchain currencies. Many big and influential people such as Elon Musk and many more are vocal about their feelings as the blockchain being the next big technology. Companies have started investing their money in cryptocurrencies for the money to grow.

As the time is progressing, The world is starting to accept this technology in their daily lives, such as many businesses have started accepting payments in bitcoin and other crypto currencies.

The main reason for such a late blowup of blockchain is that carrying out transactions in blockchain requires very high computational power which was not available back then. The main reason for the requirement of such a high computational power is that every transaction is copied and stored at multiple nodes, and each transaction requires a high amount of mathematical computations which in turn requires high computational power. Drastic and sudden increase of the amount of cyber crime in recent years has only played the role of a catalyst in the rapid growth of blockchain.

We have discussed till now the various aspects of how Blockchain is impacting the various industry verticals with its vast applications. But to completely understand how exactly this Blockchain technology is useful and is acting as a backbone of various applications, going through the advantages of this booming technology becomes really important.

There is a very thin line between the advantages and the uniqueness of this technology. Blockchain suffices some very unique features that perform as the base over which all the advantages are being obtained. So let’s iterate over the point that how exactly is Blockchain technology something unique? What makes it unique?

Let’s discuss that.

Advantages of Blockchain.

  1. Decentralized: The sole idea of Blockchain works upon forming a decentralized network of blocks connected together by a series of networks. The whole blockchain is managed by a network of independent nodes and hence there is no central authority that has control over the entire network. This enables peer-to-peer transactions easier without involving any control by intermediaries.

For example, think of a system where whenever you have to go out of your house, you need to take permission from a central authority. Even for very minimalistic issues, you would have to seek permission which gives the authority complete control over this event. But due to the decentralized structure, you can now go out and do your work without being answerable to anyone. This eases the process and speeds up transactions as well.

  1. Transparent: All the transactions taking place in the Blockchain network are recorded and are stored across the Blockchain nodes. Hence each and every participant of the transaction can view all transactions without any abstraction at any layer. Continuing over the above example. Although you are independently going out without being answerable to anyone. But it’s better whatever you do or for whatever reason, you are going out, you record it so that no one can question any anonymity of your actions. This helps everyone that is your parents keep track of what you are doing and indulging in.
  2. Immutable: The Blockchain network is designed in such a way that it enables permanent record keeping. Data stored cannot be altered or deleted or manipulated. This makes record keeping extremely secure and authentic that can be relied upon.
  3. Secure: Blockchain is one of the most secured networks in the world right now. The reason is the decentralized nature. No single node has access to the entire network. All of the nodes are independent and hence hacking into one of the nodes doesn’t affect the entire network. Hence making it secure from any vulnerabilities like hacking.

But, as a coin has 2 sides, Blockchain also has some disadvantages, Which is very important to keep in mind.

Disadvantages of Blockchain.

Some of the disadvantages of blockchain are:

  1. As blockchain requires such a high amount of computational power, It is very expensive to run. This technology requires us to set up computers and machines covering rooms worth of space just to accommodate these calculations, which is a waste of space as well as our resources. To run these giant machines, a large amount of electricity/energy is required which also plays a role in the overall increase in global pollution. Not only this, but storing such a large amount of information over multiple systems requires a huge amount of storage space.
  2. One more big disadvantage of this technology is that to approve a transaction through the blockchain technology takes a lot of time, it might take upto 15–20 minutes. In real life situations, this is a very big problem as we cannot wait 20 minutes for a transaction to complete. This is one of the biggest drawbacks of blockchain technology as compared to the traditional means for transactions that can be completed in just seconds.
  3. Moreover, the price of cryptocurrencies is very volatile and cannot be trusted with our life savings. The insane amount of fluctuations has also made it difficult for a group of people to come to terms with cryptocurrencies.

Concluding the topic, there is no doubt that Blockchain is the technology of the future. There are still many shortcomings in the technology in the present time, which is to be dealt with by us. But overcoming those shortcomings and utilizing the usefulness of this technology can revolutionize the way of transactions making it one of the widely accepted technology.

Author — Sakalya Mitra

Co-Author — Aniket Goyal. (Medium).

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