Blockchain, at its most basic, is a shared, immutable ledger for recording transactions, tracking assets, and building trust. The Blockchain “database” (more like a system of records) is stored on hundreds and thousands of servers across the entire network on the internet. This method of recording information makes tampering with records close to impossible.
of BLOCKCHAIN Technology
Blockchain facilitates recording and tracking assets in an immutable, decentralized digital ledger shared across all computers within a network. The assets can be tangible (cars, houses, land, etc.) or intangible (patents, copyrights, intellectual property, etc.). Virtually, anything of value can be tracked and traded on a Blockchain network. Thus, Blockchain not only reduces risks, but also cuts the costs for all parties involved.
The importance of Blockchain
The use of Blockchain gives businesses and network members confidence. Transactions such as orders, payments, accounts, and details about production processes or products, can only be accessed based on each individual’s permission.
All members share a single view of the truth of recorded data in this immutable chain of blocks shared across all computers in the network. As a result, businesses become more efficient as they receive faster, more accurate & trustworthy data. Blockchain opens an array of opportunities for companies at a minimal cost.
Key Elements of a Blockchain
Let’s address the core elements of Blockchain that will establish it as the future of Information Systems.
Distributed Ledger Technology
Distributed Ledger Technology
With distributed shared ledger, the transactions are recorded only once. Data is recorded across the entire shared network which enables all network participants to access this tamper-proof information.
After recording a transaction to a shared ledger, no participant can change or tamper with this information. To make any changes, he/she must add a new corrected transaction and both transactions will be visible.
A smart contract is a set of rules stored on the Blockchain and automatically executed. Transactions instantly occur when the predefined terms and conditions built into this digital contract are met.
Benefits of Blockchain
Blockchain is a long-awaited solution for businesses.
Traditionally, there has been a requirement for third-party validators to verify record duplication. All these conventional systems of record-keeping offer limited transparency which slows data verification. These systems are also vulnerable to fraud and cyber-attacks. All these extra checks cause delays in business and drain the bottom line.
Blockchain is the solution for these problems and provides a more effective way of conducting business.
How Blockchain Works
A very brief overview of what happens inside a Blockchain:
Blockchain records every transaction as a block of data. These transactions show the movement of tangible (products) or intangible (intellectual) assets.
The data block can record the condition of the assets as well as information on who, what, when, how, and where.
Each block is connected to the ones before and after it. These blocks form a chain of data as the asset moves from place to place or ownership changes.
These blocks confirm the time and sequence of transactions. They are securely linked together to prevent any block from being tampered with in any way.
Transactions are blocked together in an irreversible chain, forming a Blockchain. Each added block of data strengthens the verification of the previous block, thus making the entire block stronger.
This process makes the recording within a blockchain immutable. The possibility of tampering with the records is eliminated, making this shared ledger of transactions a network people can trust.
Types of Blockchain networks
The following are several ways to build a Blockchain network: