What is Blockchain Technology? How does Blockchain works & its Applications |

What is Blockchain Technology? How does  Blockchain works & its Applications  

Blockchain technology is a technology which has been invented by the person or a group of a person called Satoshi Nakamoto.

We have discussed the technology in the previous blog on our website. Here we will discuss the Blockchain Applications and terms used during the course.

In a nutshell, Blockchain is a technology that allows direct transaction of data and value without having any central authority between users on a public platform where everyone registered user(node) has access to each and every block of transaction. It allows peer to peer transaction in a decentralized, trusted and secure environment.

Blockchain is a technology that permits transactions(it can be a currency, media, doc files, audio files etc) to be gathered into blocks and allows the resulting ledger to be accessed by different servers.

Blocks are the digital containers that contain transactions, smart contracts, addresses and hash of the previous block. These blocks are first verified, validated by the miners, only then added to blockchain for a further successful transaction

Blockchain is a technology that enables peer to peer transaction of data without any central authority which is why blockchain is called a decentralized mode of transaction.

There are  majorly three types of blockchains;

1.Public Blockchain

    Public Blockchain is a blockchain which is available to the public which means it is accessible to each and everyone who is  registered in the blockchain network, the database is stored on the public server which allows users to see the data 

>Ethereum is an example of Public Blockchain

2.Private Blockchain

    Private Blockchain is a blockchain that is built for a private network of users or specific to the organization. It is not accessible to other user but only those who are part of the reorganization and are registered on the blockchain. Although the blockchain is still decentralized sometimes the admin or the owner of the organization can choose to have access control.

 >Hyperledger Fabric is an example of private Blockchain

    

3.Mixed/Hybrid Blockchain

    Mixed/Hybrid Blockchain is a blockchain that is sometimes partially or semi-public which means it can be accessed within the organization and also part of the private blockchain can be accessed publicly.

Characteristics & Properties of Blockchain

1.Decentralization

2.Immutable

3.Transparent

4. Secure

5.Consesus

6. Peer to Peer (P2P)

"Blockchain is a beautiful piece of code which enables multiple parties who do not know each other to come on a command platform to share their data and values in a trusted and secure environment "

What are Nodes in Blockchain Architecture?

Nodes are the users or computer within the blockchain architecture that act as a communication point.

Nodes transmit information about transactions and block within the distributed network of computers. 

Nodes maintain an independent copy of the whole blockchain ledger

Nodes can perform various functions depending on the role it takes.

A node can propose and validate transactions and perform mining to facilitate consensus and secure the blockchain by following a consensus protocol 

Types of Nodes;

1.Full Nodes

2.Lite Nodes

Addresses:

UTXO; UTXOs is referred to as the amount left after executing a cryptocurrency transaction such as bitcoin or ether

 

    Unspent Transaction Output

Transaction (Tx);

    Transactions include;

1. Ref. no of the current transaction

2. Reference(s) to one or more input UTXOs

3. Reference(s) to newly generated UTXOs by current transaction

4. Total input amount and output

Miners;

    Miners are computers that execute operations defined by the blockchain protocol

Roles of miner include;

1.Verify transactions

2.Broadcast transactions

3.Compete to create a block

4. Reach consensus by validating a block

5.Broadcast new block in the blockchain

6.Confirm transactions

DApp;

     DApp is referred to as Decentralized Applications which means the android/ios based applications that allow the user to trade in bitcoin and leverage the blockchain technology in the easiest way possible with the help of the smartphone. DApps are built

Data Provenance;

    

    Data Provenance (Data lineage) refers to checking the data stored in the database and bring out the right data

Genesis Block;

    The first block in the blockchain created is considered as genesis block which has 0 previous hash

Smart Contract;

    Smart contracts are the agreement between two people in the form of computer code which later compiled into byte code, they are like any other program that a developer write while making software in this program, developer along with the concerned authority of contract write a code where business logic is made. A smart contract is written in a programming language called Solidity

eg.

 In a real-world, while buying a real estate property, both party seller and buyer come together and sign a contract/agreement which has all the clause to be followed, and signed with consent of both party

now in blockchain, in order to implement blockchain in the real estate sector, some logic was to make so that transaction can be done on that basis. there comes smart contracts developer write the actual code where it makes all the clauses as conditions, once the condition gets satisfied only then the transaction is made

Generation of Blockchain;

    Blockchain is comparatively new invention/technology, so it has grown from MVP and still growing.

Generations;

Blockchain 1.0

    This was the first-ever time when the research paper was released and thereafter got implemented, in this generation Cryptocurrency bitcoin was introduced to the world.

Blockchain 2.0

    After the first generation, many changes and improvements were made, this is the time when Ethereum and smart contracts were introduced by a 19 y/o Russian.

Blockchain 3.0

    After going through many changes and improvements throughout this generation, this is the time when a complete way of using blockchain and cryptocurrency was used and that was DApps which is Decentralized applications just like other apps, a more simplified and user-friendly way was introduced and now is the time when more and more DApps are launching in the market, now a normal user can easily trade in bitcoins and leverage the blockchain features.

Turing Complete;

    ETH Ethereum is considered Turing complete because it has all programming capabilities like control structure, class etc while Bitcoin BTC is not because it does not have programming capabilities

Coinbase Transactions;

    

    Each block in blockchain consists of many transactions, therefore, the first transaction in the blockchain is considered Coinbase transaction.

Hash;

    Hash is nothing but a fixed length encrypted and non-reversible code that is generated when a simple text is processed with Hash functions like SHA-256, MD5 Hash etc, this is considered as one of the best ways to store the data in cryptography and maintain the highest level of  data security

When to use Blockchain?

Why Use Blockchain?

What is Ledger in Blockchain?

Traditionally ledger is an accounting of what comes in and what goes out , it is like a logbook which keeps track of transactions and maintains it.

Similarly, Ledger is used in Blockchain also to keep track of transaction and copy of each leader is distributed to every node in order to have a consensus of the transaction and non-repudiation of a transaction.

 Earlier the ledger was used to be centralized which mean that it is accounted by an only central authority like banks but after the implementation of blockchain technology it has become distributed, now anyone who is registered itself as a node in blockchain can have access to ledger copy and see the details of transactions

What is Centralized Ledger?

As mentioned above Centralized ledger(general ledger) is a ledger that is recorded in a central entity like a bank, user can see its ledger if requested. Since there is only one entity that holds the ledger there is a high risk of data manipulation, getting lost etc. in this case other users can see others ledger

   

What is a Distributed ledger?

A distributed ledger is a ledger that is distributed to other users also , there is no such central entity that is holding the ledger, once the transaction is added to the block and block added to the blockchain, it is authorized to share the copy of the Distributed ledger to each node 

Each node has a copy of the ledger where it can see the transactions and also put its consensus if the transaction is valid or not

It  works similar to the network shown here

Blockchain Applications:

As the research going on, researchers are developing more and more blockchain applications some of them are as follows;

1. Blockchain in the Healthcare sector

2. Blockchain in the Supply Chain 

3. Blockchain in the pharmaceutical

4. Blockchain in the Banking sector

5. Blockchain in the Real Estate

6. Blockchain in the Crowd Funding

7. Blockchain in the IOT

8. Blockchain in the Legal