Blockchain: Enabling the Business of Tomorrow
In December of 1974, Kahn and Cerf revolutionized lives of billions by designing the TCP/IP Internet network protocol. Developed to facilitate any computer to connect and communicate with the ARPANET, the project blossomed exponentially. This was followed by the invention of the Hyper Text Transfer Protocol or HTTP, which became a way for Web browsers to communicate with Web Servers. Over the years, technology gathered momentum to allow any computer to communicate with any other computer. Today, we have reached an era of the Internet of Everything where inter-communication between devices is not just achieve-able but a necessity.
You would be wondering how this is relevant in the blockchain context. This journey is the foundation stone to the revolutionary blockchain protocol. Blockchain is slated to disrupt our lives and the way business is conducted in ways much more than how TCP/IP revolutionized the industry. Blockchain is being increasingly seen as the rebirth of the Internet. Today, organizations across the globe including the Silicon Valley and the Wall Street, are rubbing their heads together to leverage blockchain and develop innovative offerings to usher growth and efficiency in their business models.
What is Blockchain?
From a layman’s perspective, blockchain is basically a decentralized database where recorded transactions are copied to a participating network of computers. Using sophisticated cryptography, information is disseminated across multiple computers to keep it secure. Information disseminated in a blockchain network is viewed by all those with access rights to the network. Once the data has been entered, the information cannot be modified.
Blockchain technology can work for almost every type of transaction involving value, including money, goods and property. From bitcoin powered wallets, to collecting taxes, enabling payments beyond boundaries, use cases of blockchain is endless.
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How this works?
Each piece of information in the network is a block. It is the “current” part of a blockchain which records some or all of the recent transactions. Post completion, the current block goes into the blockchain as permanent database and a new block is generated. Just like a chain, these blocks are linked to each other in a proper linear and chronological order. Every block contains a hash (pointer) of the previous block.
Blockchain is like the complete history of banking transactions. All your banking transactions are entered chronologically in a blockchain. Blocks, in this case, are like individual bank statements. The complete blockchain will have records of all banking transaction ever executed. It can thus provide insight about facts like how much value belonged to a particular address at any point in the past.
Block chain helps to reduce fraud by recording every transaction and distributing these records/blocks on a public ledger for anyone to see.
How BlockChain evolved?
With emerging cryptocurrencies and their success, it was much needed to verify and validate transactions. This was particularly important to ensure that every transaction occurring within the network is between two individual accounts and that there is no risk of double-spending.
For example, with bitcoins, the process of verification is carried out by the miners. These miners are members of the network who use computers with high processing power and specialized software to verify transactions. As these miners are using their bandwidth and electricity to process verification using specialized software and high processing speeds, they need to be compensated.
This is exactly where the context for blockchain was set. Now, in every fraction of minutes, a ‘block’ of all the transactions occurring over the Bitcoin network is created by a miner. This means that the miner creates a verified transaction file. This transaction file holds a copy of all the transactions that have occurred in the network over the past 10 minutes. Each block generated by the miner is linked to the previous block of transactions. These blocks are then linked like a chain in a linear, chronological format to generate a blockchain.
Benefits of the BlockChain:
BlockChain brings transparency to business, As every transaction has a record and the records are visible to the entire network, blockchain makes the transaction process completely transparent.
BlockChain amplifies security and reliability, Decentralization of the blocks across the network makes the blockchain protocol safe from hackers. Validation of each and every transaction by miners made makes the protocol extremely reliable.
Eliminates need for a third party, No central authority/third party is needed for peer-to-peer transactions.
Public vs Private Blockchain
Much like the cloud, which has been the topic of discussion for about a decade now, blockchains can also be public, private or hybrid.
In a public blockchain, anyone in the network can read/write on the blockchain platform by way of authorization, i.e., provided they can produce proof of work. It is a completely decentralized version of a blockchain. This medium has high number of applications and is witnessing massive deployment and use. Examples: Ethereum, allows developers to publish distributed applications using public block chain.
In a private block chain, only the owner can make changes on the network. These changes include changes to rules, transactions, etc. based on the need. This medium is fast catching up with corporates as it helps them to build proprietary systems while reducing overall development costs. Example: Blockstack helps financial institutions back office operations, including clearing & settlement on a private block chain.
The possibilities of bloc chain technology being used in day-to-day applications are endless. In the near future, we will get to see financial services industry completely moving onto block chain technology. Fintechs are already disrupting this space with latest technology and advanced algorithm. Sooner, the technology will undergo modifications to find its applications in other industries.
At Aalpha, we have been working on latest technology and building skillsets and knowledge base to power our client business with solutions that deliver efficiency and drive topline by helping them scale.
Also read: blockchain development cost
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About The Author
My name is Stuti Dhruv & I am senior consultant at Aalpha, primarily working on pre sales, consulting with clients on latest technology trends.