Blockchain Basics

 

 Blockchain Definition In Simple Words

Blockchain can be described as a data structure that holds transactional records while ensuring security, transparency, and decentralization. You can also think of it as a chain or records stored in the forms of blocks which are controlled by no single authority. Once an information is stored on a blockchain, it is extremely difficult to change or alter it.

 

Blockchain Definition In Technical Words

As per Blockchain Council, “Blockchain is a consensus-based secure decentralised public/private database which stores information immutably over a peer-to-peer network”.

 

Types Of Blockchain 

Public Blockchain 

1.      Public blockchains are designed to be fully decentralized

2.      No one owns it

3.      Anyone can read / write the transaction without any authorisation

4.      Due to complexity, security is better

5.      Computationally expensive to mine & add block

6.      It is an open to join network

7.      Example: Bitcoin Blockchain, Ethereum Blockchain etc

 

Private Blockchain 

1.      Private blockchains are more centralized

2.      One or more private entities own the blockchain

3.      Only authorised can read / write the transaction

4.      Since its private, security can be easily implemented

5.      Computationally less expensive to mine & add block

6.      Participants need consent to join the networks

7.      Examples: Privately installed Ethereum Blockchain, Bank of England’s Blockchain etc.

 

Simplified Blockchain Structure

                                              

Core Blockchain Architecture Components

• Node - user or computer within the blockchain architecture (each has an independent copy of the whole blockchain ledger)

• Transaction - smallest building block of a blockchain system (records, information, etc.) that serves as the purpose of blockchain

• Block - a data structure used for keeping a set of transactions which is distributed to all nodes in the network

• Chain - a sequence of blocks in a specific order

• Miners - specific nodes which perform the block verification process before adding anything to the blockchain structure

• Consensus (consensus protocol) - a set of rules and arrangements to carry out blockchain operations

Working Of A Blockchain Based Wallet

Benefits Of Using Blockchain 

 

Greater Transparency

Transaction histories are becoming more transparent through the use of blockchain technology. Because blockchain is a type of distributes ledger, all network participants share the same documentation as opposed to individual copies. That shared version can only be updates through consensus, which means everyone must agree on it. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network.

Enhanced Security 

Transactions must be agreed upon before they are recorded. After a transaction is approved, it is encrypted and linked to the previous transaction. This, along with the fact that information is stored across a network of computers instead of on a single server, makes it very difficult for hackers to compromise the transaction data.

Improved Traceability

Let’s take an example of a complex supply chain, you’re familiar with how hard it can be to trace an item back to its origin. When exchanges of goods are recorded on a blockchain, you end up with an audit trail that shows where an asset came from and every stop it made on its journey.

Increased Efficiency & Speed

With blockchain, transactions can be completed faster and more efficiently. Since record-keeping is performed using a single digital ledger that is shared among participants. When everyone has access to the same information, it becomes easier to trust each other without the need for numerous intermediaries. Thus, clearing and settlement can occur much quicker.

Reduced Cost

With blockchain, you don’t need as many third parties or middlemen to make guarantees because it doesn’t matter if you can trust your trading partner. Instead, you just have to trust the data on the blockchain. You also won’t have to review so much documentation to complete a trade because everyone will have permissioned access to a single, immutable version.

Blockchain Applications

• Supply chain & logistics monitoring
• Cryptocurrency exchange
• Real estate processing platform
• Voting mechanism
• Anti-money laundering tracking system
• Cross border payments
• Insurance claim processing
• Blockchain enabled IOT , etc

References & Images

https://www.blockchain-council.org/

https://mlsdev.com/blog/156-how-to-build-your-own-blockchain-architecture

https://www.computerworld.com/article/3191077/what-is-blockchain-the-complete-guide.html

https://www.ibm.com/blogs/blockchain/2018/02/top-five-blockchain-benefits-transforming-your-industry/

https://www.zignuts.com/blogs/how-blockchain-architecture-works-basic-understanding-of-blockchain-and-its-architecture/

Disclaimer

All data, product names, logos, and brands are property of their respective owners. All the data, company, product and service names used in this blog are for educational purposes only. Use of these data, names, logos, and brands does not imply endorsement.