The Revolutionary Impact Of Blockchain Technology
Blockchain is an ingenious invention designed to act as a public ledger for cryptocurrencies like Bitcoin and Litecoin. As the main technology behind one of the most popular cryptocurrencies to date, blockchain acts as proof for all cryptocurrency transactions. What you need to know is that a block forms part of the current blockchain that stores and records part or all transactions.
When a block is completed, a new block is generated automatically. It is important to keep in mind that blocks are not randomly placed on a blockchain but they are linked together in a chronological order. Each block contains the hash of the previous block.
Blockchain technology is believed to have been developed by a person or group of developers calling themselves Satoshi Nakamoto. Since 2009, the technology has allowed the distribution of digital information thus creating a new form of the internet. Although the technology was originally developed for the Bitcoin network, today it has found other uses.
How Blockchain Works
To understand how blockchain technology works, you need to know the three principal technologies which combine to form blockchain. They include:
a. Private key cryptography
b. Distributed nodes with shared ledger
c. Motivation for servicing security, transactions and record keeping
To better explain blockchain technology, we will use Bitcoin, the cryptocurrency gold that introduced the technology to the world. A single Bitcoin represents one BTC, a digital currency used in a wide variety of transactions. In a single transaction, you have two parties:-the sender and the receiver. Let’s assume the sender wants to transact 1 BTC. Before the transaction is initiated, no record of the transaction exists.
Once the sender transacts (sends) the funds to the receiver, the transaction will be recorded on a public ledger that is the blockchain. The ledger is a digital file that is decentralized which means no single server or data center stores the file. Instead, it is distributed across a network of private computers which not only store the ledger but they also execute computations. Each private computer is referred to as a node and it’s connected to others on the Bitcoin network.
Using our example above, we will assume Sam is the sender and Becky is the receiver. If Sam wants to send Bitcoins to Becky, he will initiate the transaction which will result in a message being sent to the Bitcoin network that his account should be debited. At the same time, the nodes will note that Sam’s request is to credit Becky’s account with a certain amount of BTC. What you need to know is that every node on the Bitcoin network will receive the request, compute the request and store the transaction on the ledger.
In order for the above transactions to be possible, each individual must have a digital wallet. This acts like a bank account and it’s protected by both private and public keys which are unique for each account. Having your own digital wallet is quite easy. Here is a resource to get you started.
Other Uses For Blockchain Technology
According to a recent study, by the year 2020 there will be over 26 billion connected devices. The technology can be implemented to allow smart devices to connect between each other. Furthermore, the technology can make work easier around the office or home. For example a smart fridge can detect what foods or drinks you are low on and order new shopping from Wal-Mart or Amazon.
Today, hospitals have invested in servers that run database systems which store patient records. Problem is the hospitals do not share access to the information with other hospitals. Through blockchain technology, hospitals can share patients’ information on request because they are protected by private and public keys.
Elections and Voting
Different countries around the world have either implemented an electronic voting system or a manual voting system. These systems are plagued with problems leading to recounts and manipulation. Blockchain technology allows data to be stored on a ledger which cannot be manipulated ensuring that voting is credible.
Identify theft is rife in all parts of the world. Using blockchain technology, an individual’s driving license, computer password, social security ID and others can be replaced by a Blockchain ID. This makes it easy for citizens to access government services and others.
Although blockchain technology is promising in solving problems in many sectors, the node to node network must be run ethically. If this was adhered to, not only will the technology become powerful but it will improve lives as well as the country’s economy.