It’s super secure and slightly hard to understand, but the idea of creating tamper-proof databases has captured the attention of everyone from anarchist techies to staid bankers. KLINT FINLEY Currently Currency transactions between persons or companies are often centralized and controlled by a third party organization.
To solve the above issue Blockchain technology has been developed by Satoshi Nakamoto in 2008. The goal of Blockchain technology is to create a decentralized environment where no third party is in control of the transactions and data. In a more practical way – the technology behind bitcoin and Ethereum and other cryptocurrency.
What is a Blockchain?
Blockchain is a decentralized, highly secure, immutable, public ledger used to securely exchange digital currency, perform deals and transactions. Blockchain ledger can be seen as chronological database of transactions such as collection of all Bitcoin transactions which are executed in the past. Specifically it’s a distributed database.
Who paved the way for Blockchain?
B-Money and Bit Gold (1998)
Ripple Pay (2004)
Reusable Proofs of work (RPOW) (2004)
Issues with the current transaction system-
High transaction fees.
Net banking frauds
How blockchain solves these issues?
Immutable to hacks.
Double spending is not allowed.
Block Component’s (Sample)
- Block #125552
- No of Transactions – 4
- Height 125552 (Mainchain)
- Block Reward 50 BTC
- Timestamp May 21, 2011 1:26:31 PM
- Merkle Root 2b12fcf1b09288fcaff797d71e950e71ae42b91e8bdb2304758dfcffc2b620e3
- Previous Block 125551
- Difficulty 244112.48777434
- Bits 1a44b9f2
- Size (bytes) 1496
- Version 1
- Nonce 2504433986
- Next Block 125553
The ledger consists of linked batches of transactions known as blocks (hence the term blockchain),
and an identical copy is stored on each of the roughly 2, 00,000 computers that make up the
cryptocurrency network. Each change to the ledger is cryptographically signed to prove that the
person transferring virtual coins is the actual owner of those coins.
But no one can spend their coins twice, because once a transaction is recorded in the ledger, every
node in the network will know about it. The idea is to both keep track of how each unit of the virtual
currency is spent and prevent unauthorized changes to the ledger.
Blockchain 1.0: Cryptocurrency – Bitcoin (2009), Ethereum (2015) and many more.
Blockchain 2.0: Smart contracts – a computer program that directly controls the transfer of
digital currencies or assets between parties under certain conditions.
Blockchain 3.0: Areas in government, health, science etc.
High quality data
Transparency and immutability
Lower transaction cost
High Computational power
Conduct more studies on scalability issues of Blockchain.
Scalability issues such as performance and latency have to be addressed.
Develop more Blockchain based applications beyond Bitcoin and other cryptocurrency