Blockchain technology explained: Here are its top features
Everyone is talking about the blockchain technology which is expected to change the socio-economic landscape of the world in the near future.
The technology is mostly known for its connection with Bitcoin, the popular cryptocurrency which has seen a meteoric rise in valuation in the recent months. But blockchain is not just about Bitcoin. Its applications are beyond the cryptocurrencies, ranging from governance to preventing financial frauds.
Unsurprisingly, major technology firms across the world such as Microsoft, IBM and Intel are hopping onto the blockchain bandwagon. And it's not just the West that's excited about blockchain. India is seriously considering the integration of blockchain into the country's digital economy.
Finance minister Arun Jaitely while presenting the Union Budget 2018-19 said that the government was willing to explore the use of blockchain technology.
"The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore use of block chain technology proactively for ushering in digital economy," he said.
What is blockchain technology?
Blockchain technology was originally developed to facilitate the digital currency Bitcoin. But these are two separate technologies. While bitcoin is an encrypted currency, blockchain is the platform for peer-to-peer payment, supply chain tracking, and lots more. Consider this as an operating system for applications such as bitcoins and ethereum to function.
In the simplest words, blockchain technology is a shared and open ledger that keeps a record of the transactions and cannot be modified. And as the name implies, blockchain includes an ever-increasing blocks of data with each block containing transaction information.
The blockchain technology is based on decentralisation which means the data is accessible to everyone while the data is managed by a cluster of computers and not owned by a single person.
Top features of blockchain
One of the major issues with today's digital economy is online security. Blockchain addresses that concern to a large extent.
The technology relies on a consensus from all network members for the validation of a transaction. And all validated transactions are permanently stored in the data blocks which cannot be altered or deleted by anyone.
"Blockchain uses strong cryptography to create transactions that are impervious to fraud and establishes a shared truth. Also, all the transactions are signed with the digital certificate." Microsoft explains in a note.
A decentralised system makes it difficult for hackers to breach the transaction by targeting one unit, a common pain point in a centralised system where the data is stored at a single core.
Immutability refers to the fact that the blockchain is highly resistant to alterations. In a blockchain setup, the data blocks are linked and secured with a special cryptography, called hash.
For instance, hash for "Good Morning" is E526F13918F16C1C65FC4AC51ABE8B5B991769AE6718495A7AD9984406A14A2C. And the hash for "Good Mornin" is 551294185A8D2AD6A0C72EC63FF7D68F4C4AC538B334D3256AFE21DE001E7C26.
So, any minute alteration generates a different hash and is immediately flagged. Also, it is impossible for one to trace back the older one.