What is Blockchain
A blockchain is a growing list of records, called blocks, which are
linked using cryptography. Each block contains a cryptographic
hash of the previous block a timestamp, and transaction data
(generally represented as a Merkle tree).
By design, a blockchain is resistant to modification of the data.
It is “an open, distributed ledger that can record transactions
between two parties efficiently and in a verifiable and
Picture a spreadsheet that is duplicated thousands of times
across a network of computers. Then imagine that this network
is designed to regularly update this spreadsheet and you have
a basic understanding of the blockchain.
Information held on a blockchain exists as a shared — and
continually reconciled — database. This is a way of using the
network that has obvious benefits. The blockchain database isn’t
stored in any single location, meaning the records it keeps are truly
public and easily verifiable. No centralized version of this information
exists for a hacker to corrupt. Hosted by millions of computers
simultaneously, its data is accessible to anyone on the internet.
The Three Pillars of
The three main properties of Blockchain Technology
which has helped it gain widespread acclaim are as follows:
In a decentralized system, the information is
not stored by one single entity. In fact, everyone
in the network owns the information.
In a decentralized network, if you wanted to
interact with your friend then you can do so
directly without going through a third party.
That was the main ideology behind Bitcoins.
You and only you alone are in charge of your
money. You can send your money to anyone
you want without having to go through a bank.
Immutability, in the context of the blockchain,
means that once something has been entered
into the blockchain, it cannot be tampered with.
The reason why the blockchain gets this property
is that of cryptographic hash function.
In simple terms, hashing means taking an input
string of any length and giving out an output of
a fixed length.
In the context of cryptocurrencies like bitcoin,
the transactions are taken as an input and run
through a hashing algorithm (bitcoin uses SHA-
256) which gives an output of a fixed length.
One of the most interesting and misunderstood concepts in blockchain technology is “transparency.” Some people say that blockchain gives
you privacy while some say that it is transparent.
Why do you think that happens?
Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s
transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.
The following snapshot of Ethereum transactions will show you what we mean:
So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address.
Why do people use the
One of the main uses of the peer-to-peer network is file sharing,
also called torrenting. If you are to use a client-server model for
downloading, then it is usually extremely slow and entirely
dependent on the health of the server. Plus, like we said,
it is prone to censorship.
However, in a peer-to-peer system, there is no central authority,
and hence if even one of the peers in the network goes out of
the race, you still have more peers to download from.
Plus, it is not subject to the idealistic standards of a central system,
hence it is not prone to censorship.
If we were to compare the two :
What is Blockchain?
And What New Applications Will It Bring Us?
The blockchain gives internet users the ability to create value and authenticates digital information.
What new business applications will result from this?
- # 1 Smart contracts
Distributed ledgers enable the coding of simple contracts
that will execute when specified conditions are met.
Ethereum is an open source blockchain project that was
built specifically to realize this possibility. Still, in its early
stages, Ethereum has the potential to leverage the
usefulness of blockchains on a truly world-changing scale.
At the technology’s current level of development, smart
contracts can be programmed to perform simple unctions.
For instance, a derivative could be paid out when a
financial instrument meets certain benchmark, with the
use of blockchain technology and Bitcoin enabling the
payout to be automated.
- # 2 The sharing economy
With companies like Uber and Airbnb flourishing, the
sharing economy is already a proven success. Currently,
however, users who want to hail a ride-sharing service have
to rely on an intermediary like Uber.
By enabling peer-to-peer payments, the blockchain opens
the door to direct interaction between parties — a truly
decentralized sharing economy results.
An early example, OpenBazaar uses the blockchain to
create a peer-to-peer eBay. Download the app onto your
computing device, and you can transact with OpenBazzar
vendors without paying transaction fees. The “no rules” ethos
of the protocol means that personal reputation will be even
more important to business interactions than it currently
is on eBay.
- # 3 Crowdfunding
Crowdfunding initiatives like Kickstarter and Gofundme are
doing the advance work for the emerging peer-to-peer
The popularity of these sites suggests people want to have a
direct say in product development. Blockchains take this
interest to the next level, potentially creating crowd-sourced
venture capital funds.
In 2016, one such experiment, the Ethereum-based DAO
(Decentralized Autonomous Organization), raised an
astonishing $200 million USD in just over two months.
Participants purchased “DAO tokens” allowing them to vote
on smart contract venture capital investments (voting power
was proportionate to the number of DAO they were holding).
A subsequent hack of project funds proved that the project
was launched without proper due diligence, with disastrous
consequences. Regardless, the DAO experiment suggests the
blockchain has the potential to usher in “a new paradigm of
- # 4 Governance
By making the results fully transparent and publicly
accessible, distributed database technology could bring
full transparency to elections or any other kind of poll
Ethereum-based smart contracts help to automate the
The app, Boardroom, enables organizational decision-
making to happen on the blockchain.
In practice, this means company governance becomes
fully transparent and verifiable when managing digital
assets, equity or information.
- # 5 Supply chain auditing
Consumers increasingly want to know that the ethical
claims companies make about their products are real.
Distributed ledgers provide an easy way to certify that the
backstories of the things we buy are genuine.
Transparency comes with blockchain-based timestamping
of a date and location — on ethical diamonds, for instance
— that corresponds to a product number.
The UK-based Provenance offers supply chain auditing
for a range of consumer goods. Making use of the
Ethereum blockchain, a Provenance pilot project ensures
that fish sold in Sushi restaurants in Japan has been
sustainably harvested by its suppliers in Indonesia.
※ Source : blockgeeks