Blockchain Technology is Best Explained Timeline, Types, Uses and How to Invest

1. Blockchain Technology is Best Explained: Introduction, Benefits and How It Works We are living in the fourth industrial revolution, and it is more important than ever to discover ways to keep up with technology and embrace it in this day and age. That’s why I will introduce you to a mind-blowing technology – Blockchain, as it is one of the most talked-about inventions from the last decade.

2. What is Blockchain Technology? A blockchain is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.

3. A Quick Glimpse of Blockchain History Timeline The year 2008 was an exciting one. The introduction of digital information into currency – an idea that had been bantered around since the early 90s – came to life with the debut of Bitcoin, the world’s first decentralized and anonymous cryptocurrency. However, the idea took another one year to come into reality. And the first version of blockchain was proposed in 2009 by Satoshi Nakamoto, thought to be a pseudonym used by the individual or group of individuals who proposed the technological foundations of Bitcoin and blockchain. So officially, 2009 was a banner year for bitcoin and the blockchain, and this is where it all started when Satoshi Nakamoto mined the first bitcoin block and validated the concept of blockchain. At first, its utility only included transactions on Bitcoin’s peer-to-peer network. Still, it later evolved to include other types of peer-to-peer transactions and transactions involving entities outside the blockchain.

4. How does Blockchain Technology Works? While Bitcoin and cryptocurrencies have become value-added application of blockchain technology, the scope of the decentralized ledger is far and wide. Blockchain ledgers are used by multiple industries to record, manage, store, and access data. Initially, a participant of a blockchain network performs a transaction, which can be a transaction of money, uploading a document, or transaction of data. Because blockchain does not have a centralized entity, the transaction lands in a decentralized peer-to-peer network in order to get verified. Immediately, other members of the blockchain network start verifying the authenticity of the data or transaction. More specifically, a consensus mechanism conducts the verification process. In other words, if a majority of the network agrees that the transaction is legitimate, then the transaction is verified. Subsequently, the approved transaction is bundled with other transactions made within a specific duration and recorded in a block. The newly formed block is then connected to the previous block through a cryptographic-hashing protocol. Blocks are connected in a sequential manner such that any modification of data in any one block results in the incorrect sequencing of all of the blocks succeeding it as well. Similarly, the cryptographic sequencing makes it impossible for a bad actor to tamper with data on the blockchain network. It also eliminates the opportunity for any participant to engage in fraudulent activities.

5. What are the Benefits of Blockchain Technology? The blockchain is nothing short of a game-changing technology for anyone who chooses to use and master it. Let’s discuss the benefits of blockchain: i) Transparency – Blockchain makes transaction histories more transparent than they ever were. Because it is a type of distributed ledger, all nodes in the network share a copy of the documentation. The data on a blockchain ledger is easily accessible for everyone to view. If a transaction history changes, everyone in the network can see the change and the updated record. Therefore, all information about currency exchange is available to everyone.

6. ii) Security – Blockchain is better than any other record-keeping system when it comes to security, by all standards. The shared documentation of transactions can only be updated and/or modified with consensus on a blockchain network. Only if everyone or a majority of nodes agree to update a record, the information is edited. Moreover, when a transaction is approved, it is encrypted and connected with the previous transaction. Therefore, no one person or party has the potential to alter a record. Blockchain is decentralized, and so, no one reserves the right to update records by their free will. Any industry that has a critical need to protect sensitive data such as governments, healthcare, financial services, etc., can use blockchain to enforce stringent security. iii)Auditability – Another aspect of the point mentioned above is auditability. As each transaction is recorded for its complete lifetime in blockchain, there is an audit trail that already exists for you to see and check the authenticity of your asset.

7. iv) Efficiency – With traditional, paperwork processes, completing a transaction is exhausting as it needs third-party mediation and is prone to human errors. Blockchain can streamline and discipline these legacy methods and remove the risk of mistakes, making trading more efficient and faster. Since there is only one ledger, parties don’t have to maintain multiple documents, a fact that leads to much less clutter. And, when everyone has access to the same information, establishing trust is easier. Without any need for intermediaries, settlements can be made smooth and effortless, too. v)Traceability – In complex supply chains, it is hard to trace products back to their origins. But, with blockchain, the exchanges of goods are recorded, so you get an audit trail to learn where a particular asset came from. You also get to know every stop the product made on its journey & this level of traceability of products can help verify the authenticity and prevent frauds.

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