The most readily available and easy-to-find Blockchain definition over the internet is that it is a decentralized , distributed, public ledger. Ergo, we can say that this is a growing list of records called blocks that are linked through cryptographic principles and distributed and maintained over a public network.
The network is a collection of computers called nodes that are interconnected. It is also called a peer-to – peer network where each peer is equally privileged and equally accountable. This eliminates the need for a central authority to monitor and maintain the databases and therefore saves additional costs.In a peer-to – peer network, the same copy of data is available to everyone making it very difficult for hackers to manipulate any information that was not the case with centralized systems such as banks or other aggregators.
The databases are called the distributed public ledger because, once any new record is added to the blockchain, it is transmitted to the entire network of nodes where everyone can see the transaction. However, the identity of the person remains private, while only displaying his or her digital identity.
Blockchain is an information recording system that makes it difficult or impossible to change, hack, or cheat the system.
The blocks have three main components:
- Data on the transaction
- Unique cryptographic code called hash and timestamp
- The hash of the previous block.
What’s the Hash?
A hash is a mathematical function that converts an input string of any length to an output string of a fixed length of numerical values. These values are unique to a particular block and its information, and they change even with a slight change in the underlying block.
This blockchain property makes it immutable, which means that once something has been entered into a blockchain, it can not be tampered with. If a hacker tries to tamper with a block, the hash of the block changes, so the hash of the next blocks changes.To spread change across the blockchain, 51% of the network would have to agree to it, which is almost impossible. That’s how stunningly reliable and innovative blockchain is.
How Does Blockchain Work?
With a plethora of practical applications being explored and implemented, blockchain is designed to make business operations secure, efficient and transparent. Also, more and more players are entering the market with thoughtful and mature efforts, making it certain that Blockchain will prove to be the technology that everyone is talking about.
In order to create a block, a transaction has to happen first. So it all starts when one of the nodes starts a transaction that can be anything from transferring money or any other digital asset to another user. Each node has a secure digital identity created through cryptography. This digital identity can be used to identify the starting point and authenticity of the transaction.
Now, before this transaction is considered to be complete, it must be verified. Consequently, all the nodes start working towards the verification of the transaction and the underlying details, such as the parties involved, the amount, time of the transaction, etc.
Once a consensus has been reached, the transaction will become part of the block along with thousands of other such transactions. Immediately the newly created block will get a unique identification code called the hash and the hash of the previous block. After that, the block will be added to the blockchain.As soon as the block is connected to the blockchain, it becomes part of the public ledger where it is visible to everyone on the network, creating a unique record with a unique history.
Consider , for example, the supply chain system of farmers, distributors , wholesalers and retailers. Here, the digital asset is the farm product that is stored in the ledger. In the beginning, all items are available until they are sold. The first transaction is between the farmer and the distributor, and the status of the digital assets is changed for sale.Before this transaction becomes part of the block, there will be a consensus among all the nodes that the transaction occurred the way the parties said it happened. Once a consensus has been reached, the transaction will become part of the block and will be added to the ledger.
It may be possible that not all the nodes will participate in the consensus, and only some nodes that have been selected as representatives will be able to vote. This will depend on the design and structure of the blockchain.
Security by the blocks
As the name implies, a blockchain is a chain of digital blocks which contains transaction records. Before and after that block each block is connected to all of the blocks. This makes it difficult to tamper with a single record because, in order to avoid detection, a hacker would have to change the block containing that record as well as those linked to it.This alone may not seem like much dissuasion, but blockchain has some other inherent features that provide additional means of security.
Records on a blockchain are secured by cryptography. Network participants have their own private keys assigned to the transactions they make and act as a personal digital signature. If a record is changed, the signature will become invalid and the peer network will immediately know that something has happened. Early notification is crucial to the prevention of further damage.
Unfortunately, for these ambitious hackers, blockchains are decentralized and distributed across peer-to – peer networks that are constantly updated and kept in sync. Because they are not located in a central location, blockchains do not have a single point of failure and can not be changed from a single computer.It would require massive amounts of computing power to access each instance (or at least a 51% majority) of a certain blockchain and alter them all at the same time. There has been some debate as to whether this means that smaller blockchain networks could be vulnerable to attack, but a verdict has not been reached.
At a glance, blockchains have some desirable features that would help secure your transaction data. However, there are other conditions and requirements to consider when you want to use a blockchain for business purposes.
Blockchain Enterprise Concept
Blockchain allows any two parties to deal directly with each other without the presence of a third party or a governing body. It opens doors for direct peer-to – peer payments for booking rides, homes, buying things, ordering food, and unlimited such things without paying any transaction fees.Blockchain can make supply chains more transparent and efficient; it can be of great help to the health care, real estate and education sector in trouble-free record keeping, banking stands to benefit the most from integrating blockchain into its business.
FedEx is already using Blockchain technology to track their high-value cargo and is planning to extend the functionality to all their shipments soon. There is a long list of applications where blockchain integration can transform the way organizations (enterprises) operate. Enterprise blockchain allows authorized and private transactions not supported in most Public blockchains.
Extensive work is underway on blockchain, and there is still a tremendous amount of opportunity to make the blockchain ecosystem more secure and viable. The good thing is that the future looks bright as far as Blockchain is concerned.