The Blockchain is an undeniably ingenious invention – typically refers to the transparent, widely accessible ledger that allows us to securely transfer the ownership of units of value using public key encryption. This technology is not centrally controlled by a bank as it uses decentralized consensus to maintain the network. In fact, it becomes more secure as the network grows larger and decentralized. The potential for blockchain technology is not limited to bitcoin. As such, it has gained a lot of attention in a variety of industries including: financial services, charities and nonprofits, the arts, and e-commerce.
Blockchain and Bitcoin are not the same
Many people assume that blockchain and bitcoin are the same. Blockchain is the underlying technology of Bitcoin. The Bitcoin protocol is built on the blockchain. In 2008, Bitcoin was introduced as a new electronic cash system that’s fully peer-to-peer, with no trusted third party. The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. As such Bitcoin can actually be considered as the first use case leveraging blockchain technology. The confusion between blockchain and bitcoin often arises because these two concepts were introduced at the same time.
Benefits of Blockchain
- Records Database with History – You will get a snapshot of data that’s up to date when you look at a regular database. Blockchains do this too, but they also maintain a record of all the information that existed before.
- Secured System- Highly secure due to cryptographic and decentralized Blockchain protocols. Blockchain is a decentralized way of storing and accessing data makes the whole system incredibly secure – because, unlike a centralized database, there’s no one single point of entry for hackers. It becomes more secure as the network grows larger and decentralized.
- No Centralization- There’s no need for a central administrator because the system of record is decentralized and replicated in its entirety in multiple places.
Key Challenges of using Blockchain Technology
The lack of awareness and understanding of the Blockchain concept and how it works are the key challenges of using Blockchains in industries other than financial services sector. Even though blockchain technology has a lot of perks it has an inefficient technological design. A coding flaw or loophole is one of the significant points in this.
The fact that the network is decentralized so that no one can know your true identity attracts criminal personals as well. Complying with the existing regulations and ensuring the required data privacy and security for the shared data bases also adds to the major roadblocks in adopting Blockchain. Criminals now use these cryptocurrencies to purchase limited illegal equipment and payment methods. They also ask cryptocurrencies in exchange as a ransom.
In the presence of multiple and different copies of the blockchain, the consensus protocol tends to adopt the longest chain available. In large blockchains the majority of participating nodes must authenticate new transactions and record that information if they are to be added to the ledger; that leads to slow and arduous transactions.
Blockchain is the Future
There is no doubt in that Blockchain is of course going be on top in the future! Blockchains will help develop a more trusted environment. Your actions and reactions will be recorded in the system. The ability to maintain a ledger without any need for a trusted third party is a significant breakthrough. By 2030 or even sooner, every individual and their virtual or physical assets will have blockchain identities. Blockchain will help improve systems by bringing about many identity solutions. With today’s identity systems being dysfunctional and insecure, blockchain technology will act as a single source of verification for both individuals and assets.
This will help:
- Increase privacy and efficiency.
- Decentralize and verify the data collected.
- Store information in a single ledger.
- Reduce the risk of security breaches.
- Create a new identity platform which is distributed and not controlled by a central authority. This increases transparency.