Blockchain

by SAILENDRA


September 14 , 2017

What is a Blockchain?

B lockchain is a distributed digital ledger, which is used to keep up a persistently developing a list of completed blocks. Blocks are connected through links and contains time-stamp and information. Each transaction can be recorded between two parties effectively and permanent way.


Blockchain technology is a build in robustness nature, because it cannot be controlled by any single entity and no single point of failure.


Blockchain was first implemented by Satoshi Nakamoto in 2008 as a center part of the digital currency Bitcoin, which generally populates records for all exchanges like a public ledger.


How it works?

Not every blockchain works in a similar way. For instance, they can contrast in their agreement mechanism, which are the rules by which the technology will update the ledger. We have already discussed that it is a distributed ledger on which new transactions are logged in a blocks. And each block identified by a cryptographic hash of that data. The similar hash will always result from that data, but impossible to recreate the data from hash. Correspondingly, if even the smallest detail of that transaction data is changed, it will create a different hash and since the hash of each block is included as a data point in next block, resulting block would also wind up with different hashes. This is the things that makes the ledger sealed.


At last the security comes from the fact that multiple computers called nodes stores the blockchain. So to modify the ledger, one would need to gain control at least 50% of computing power, which is very difficult especially for a public blockchain like Bitcoin.


The basic concept of blockchain is quite simple. A distributed database that maintains a persistently growing list of transaction records.


Public Blockchain & Private Blockchain

A public blockchain is a platform where anyone able to read or write to the platform, provided they are able to show proof of work for the same. This a fully decentralized blockchain.


Financial companies have not prioritised decentralized blockchain. Bitcoin and many cryptocurrencies use open(public) blockchain. As of September 2016, bitcoin has the highest market capitalization.


A private blockchain allows only the owners to have the rights on any changes that must be finished. This could be seen as a similar version to the existing infrastructure wherein the owner (a centralized authority) would have the power to change the rules, revert transactions, etc. based on the need. Private blockchains lack transparency. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 percent of their network and alter transactions however you wished.


Applications

Blockchain technology has a large potential to transform business operating models in the long term. Blockchain distributed ledger technology is more a foundational technology with the potential to create new foundations for global economic and social systems than a disruptive technology, which typically attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Even so, there are a few operational products maturing from proof of concept by late 2016. The use of blockchains promises to bring significant efficiencies to global supply chains, financial transactions, asset ledgers and decentralized social networking.


Blockchains technology can be integrated into multiple areas. This means specific blockchain applications may be a disruptive innovation, because substantially lower-cost solutions can be instantiated, which can disrupt existing business models. Blockchain protocols facilitate businesses to use new methods of processing digital transactions. Examples include a payment system and digital currency, facilitating crowd sales, or implementing prediction markets and generic governance tools..


Major applications of blockchain include cryptocurrencies including bitcoin, BlackCoin, Dash, and Nxt and blockchain platforms such as Factom as a distributed registry, Gems for decentralized messaging, MaidSafe for decentralized applications, Storj for a distributed cloud, Sia for distributed storage, and Tezos for decentralized voting. Frameworks and trials such as the one at the Sweden Land Registry aim to demonstrate the effectiveness of the blockchain at speeding land sale deals. The Republic of Georgia is piloting a blockchain-based property registry. The Ethical and Fair Creators Association uses blockchain to help startups protect their authentic ideas.


New distribution methods are available for the insurance industry such as peer-to-peer insurance, parametric insurance and microinsurance following the adoption of blockchain. Banks are interested in this technology because it has potential to speed up back office settlement systems. The sharing economy and IoT are also set to benefit from blockchains because they involve many collaborating peers. Online voting is another application of the blockchain. Blockchains are being used to develop information systems for medical records, which increases interoperability. In theory, legacy disparate systems can be completely replaced by blockchains. Blockchains are being developed for data storage, publishing texts and identifying the origin of digital art.Banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.


Benefits of Blockchain Technology

  • Current payment systems require third party intermediaries that often charge high processing fees, however machine to machine payment using the Bitcoin protocol could allow for direct payment between individuals as well as supports micropayments.
  • As it is a public ledger system, blockchain records and validates every single transaction made, which makes it secure and dependable.
  • Every transactions made are approved by miners, which makes the transaction permanent and keep it from the risk of hacking.
  • Blockchain is the decentralization of the technology.


Conclusion

Now banks and several financial institutions have also been active in investing in this area. Banks in India have started utilizing blockchain for transactions however it is as yet infrequent. ICICI Bank, YES Bank, Kotak Mahindra Bank, and Axis Bank have utilized it for vendor financing and international trade finance.

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SAILENDRA


Mobile Product Analyst, Digitization,Research Writer, Business Development Experts, Blogger, Startup, Tech News, Positive, experienced with Banking Payments Process implementation with Product Management & Customer Success Management Experience. Most important of all - A Learner

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