Blockchain technology has become buzzword in the tech industry. Blockchain technology is still at his birth phase and there is very little idea about its technology and future possibilities. But due to its decentralized nature it promises to come as a new revolution after Artificial Intelligence. It is like a digital ledger which keeps all the transaction details in block forms. Each block is connected to each other and it forms a blockchain. A blockchain can be created for an individual, for a group, for a organization. It can be used to make deals in business communication or financial transactions. Let’s understand blockchain with a simple anecdote —
Imagine your company organized a foreign trip. You and your co-workers decided to create a digital diary. You want to collect all the memories of this trip. In this digital diary, you all noted down everything that you did together. Whenever you or your co-workers added anything new to the diary, such as a special moment or any important event, all of you had to give consent if it was true and accurate. Everyone in the group has a copy of the entire trip.
BLOCKCHAIN, this digital technology works similarly. Blockchain came into existence in 2008. Satoshi Nakamoto is named as the inventor of this great technology.
To understand Blockchain in a better way imagine that you and your co-workers were using a laptop or digital devices to note down memories. Adding new memories was like adding a new page to the digital diary. Each page can be considered a block. Thus a chain of connected or related blocks is a Blockchain.
Since every one of you has a copy of the whole chain it’s difficult for anyone to make a change without everyone noticing it. The blockchain helps to keep information safe by connecting all the related information and it’s very hard to cheat.
What are the Features of Blockchain?
- Transparency
Transparency means nothing is kept hidden here. Everyone from the group members can see all the data or information stored in blocks and none can change without everyone’s permission. If any changes are done then it appears to all. This helps to build trust among the users and stakeholders of any particular blockchain.
- User Privacy and Security
Blockchain technology offers robust security and privacy features. Blockchain keeps the personal details of users safe. While all the group members can see other activities, however, personal details of each user are private. Here each user has a public and private key. It allows other users to make any changes.
Blockchain encrypts each recorded information and each new added information is linked with the previous encrypted information.
- Decentralization
Here, Decentralization meaning is, decision-making power is not restricted to one individual, organization, or central authority. Instead, decision-making power is spread out among many individuals or entities.
A blockchain is a digital chain that may be made up of many blocks from many parties involved. It allows people to store and share information in a decentralized and distributed system.
The decentralization feature of Blockchain also provides cyber security to users. Decentralization nature eliminates a single point of failure, making it more resilient to cyber-attacks. The decentralization nature of blockchain ensures the integrity of personal and private data and information.
- Immutability
Once data is generated on the blockchain, it is impossible to alter or delete. It is a permanent record. This immutability ensures the integrity and trustworthiness of blockchain technology.
- Consensus Mechanism
Blockchain works on Validation for any new addition of information and data. For any new entry, it needs the permission of all the group members. That’s why it’s difficult to make any changes in the history of the record.
What are the disadvantages of Blockchain?
While Blockchain technology is a kind of revolution, it also faces many challenges. Some of them are listed below:-
1 Scalability
Speed: The blockchain can become congested as the number of users and activity increases. It may lead to slower processing speed. This is a major issue with public blockchain bitcoin and Ethereum.
Long Validation Process: Blockchain’s biggest strength is that it provides accurate results. However, the validation process itself is complex.
2 Security Risks: – Blockchain transparency can conflict with the security of user data. Public blockchains allow anyone to view the details, which can expose sensitive information. It is more risky when it comes to financial transactions. Sensitive information can be exposed if not properly managed.
Adoption Barriers: – Blockchain technology is complex, and it is difficult to use by a non-technical person. This may limit the spread and importance of Blockchain technology
3 Cost: – Implementing Blockchain technology needs huge costs for the infrastructure development and training of the user. This may be difficult to bear the price of it for an individual or small organization.
4 Integration complexity: – Integrating blockchain technology with existing systems can be a challenging and costly affair. It needs technical manpower, investment in infrastructure, and training investment in human resources.
4 High Energy Consumption
Blockchain technology requires a lot of computation to produce accurate and reliable information. This has raised environmental concerns, and many environmentalists have called for more energy-efficient alternatives.
Legal Challenges: – Every country has its own rules to deal with cyber or technology-related things. Cross-border business can be challenging. Technology brings users from across the world together. But people of different countries are bound to their local laws. Laws related to technology varies countries to countries. Therefore, legal situations dealing with blockchain will be challenging.
Despite many challenges, ongoing research and development are addressing many of these issues, making blockchain more accessible and efficient. It continues to evolve rapidly, with several developments in 2024. What are the applications of Blockchain technology? Here are some of the key trends, applications and advancements in Blockchain Technology:
1 Interoperability and Cross-Chain Solutions: Projects like Polka dot and Cosmos enhance blockchain operations. This project works on seamless communication between different blockchains.
2 Non-Funding Tokens (NFTs) Beyond Art are being used in various sectors beyond technology. NFTs are being used in gaming industries, Real estate, Intellectual Property Rights, etc.
4 Sustainability and Green Blockchain:- There is growing emphasis on developing energy-efficient blockchain to make it more eco-friendly and sustainable.