What is Blockchain Technology?

Blockchain Technology

Blockchain technology is a growing list of records, called blocks, that are linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree). The timestamp proves that the transaction data existed when the block was published in order to get into its hash. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.

They are typically managed by a peer-to-peer network for use as a publicly distributed ledger, where nodes collectively adhere to a protocol to communicate and validate new blocks. Although records are not unalterable as forks are possible, these may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance.

It was popularized by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin, based on work by Stuart Haber, W. Scott Stornetta, and Dave Bayer. The identity of Satoshi Nakamoto remains unknown to date. The implementation of the blockchain within bitcoin made it the first digital currency to solve the double-spending problem without the need for a trusted authority or central server. The bitcoin design has inspired other applications and blockchains that are readable by the public and are widely used by cryptocurrencies. The blockchain is considered a type of payment rail. Private blockchains have been proposed for business use but Computerworld called the marketing of such privatized blockchains without a proper security model “snake oil”. However, others have argued that permission blockchains, if carefully designed, maybe more decentralized and therefore more secure in practice than permissionless ones.

Blockchain Technology Overview

It is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a network, reducing risk and cutting costs for all involved.

Business runs on information. The faster it’s received and the more accurate it is, the better. It is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permission network members.

Blockchain technology can be integrated into multiple areas. The primary use of blockchains is as a distributed ledger for cryptocurrencies such as bitcoin; there were also a few other operational products that had matured from proof of concept by late 2016. As of 2016, some businesses have been testing the technology and conducting low-level implementation to gauge its effects on organizational efficiency in their back office.

In 2019, it was estimated that around $2.9 billion were invested in this technology, which represents an 89% increase from the year prior. Additionally, the International Data Corp has estimated that corporate investment into this technology will reach $12.4 billion by 2022. Furthermore, According to PricewaterhouseCoopers (PwC), the second-largest professional services network in the world, blockchain technology has the potential to generate an annual business value of more than $3 trillion by 2030.

PwC’s estimate is further augmented by a 2018 study that they have conducted, in which PwC surveyed 600 business executives and determined that 84% have at least some exposure to utilizing blockchain technology, which indicts a significant demand and interest in blockchain technology.

Blockchain Technology - Bitcoin

Individual use of blockchain technology has also greatly increased since 2016. According to statistics in 2020, there were more than 40 million blockchain wallets in the year 2020 in comparison to around 10 million blockchain wallets in 2016.

In this video by Simply Explained, you’ll learn the basics of blockchain. Watch the video below:

Video By: Simply Explained (YouTube)

Content Reference: Wikipedia, IBM

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