In the world of digital technology privacy and security are the most concerning aspects. But often, a singular authority controlling the data leads to a breach of privacy and security. Blockchain is a new technology that distributes a ledger system that enables secure and transparent record-keeping of transactions across a network of computers. This is called decentralization.
What is decentralization?
Decentralization refers to the distribution of power, authority, or decision-making away from a central authority. In such a system no single entity or authority has complete control over the entire network for resilience, transparency, and trust. It is one of the core features of blockchain. Instead of a single or central authority to verify and record transactions, it distributes it over a large network.
How does BLOCKCHAIN work?
Block Chain stores transactions in bundles referred to as blocks. Each new block contains a cryptographic hash of the previous block, creating a chronological chain of blocks. This makes it difficult of a transaction to be deleted once it is stored in blockchain. In order to tamper with a block, one would need to alter all the subsequent blocks, which is computationally infeasible. These blocks are verified by validators or miners.
What are its applications?
The transparent nature of blockchain allows all the users to view and change transaction history in real-time, each time marking with a timestamp and cryptographic signature. This enhances trust and accountability in multiple applications. A blockchain network can act as a smart contract enabling automation of complex business processes without the requirement of a third party. Such smart contracts allow to facilitate supply chain management, trustworthy voting systems, and financial transactions.
Blockchain technology gained major publicity over its capability to run networks facilitating cryptocurrencies like Ethereum and Bitcoin.
Challenges
Although Blockchain offers evident benefits it has a long way to go in terms of scalability. The network of systems also requires a high and continuous supply of energy. It has recently also faced problems regarding regulations around various parts of the world due to privacy concerns.
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