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Is blockchain a technology or an algorithm?


After a phenomenal growth of bitcoin in 2017, all of sudden everyone in the cyber world has started talking about crypto-currency and the technology behind it - Blockchain. I am sure you too must be flowing through this new fanfare. So here I would be trying to explain this platform in just 11 mins.

What is Blockchain?
Blockchain is an ever-growing list of transactions, called Blocks which are always linked to their previous Blocks and are secured by cryptography hash. This Blockchain will be stored on distributed peer-to-peer (P2P) network nodes. If you are familiar with BitTorrent, you can easily understand this P2P communication.
Each block has three things: data, its own hash and hash to previous block
  1. Data can be regarded as a ledger.
  2. Hash can be compared with fingerprint, which is a unique identification of the block. It is generated based on the content and even a single character change will make it different.
  3. Hash to previous Block: this creates a link which can be traversed backwards. Please refer the diagram below for better understanding-
Fig. Blockchain Schematric View
While adding a new Block, all the nodes on the n/w reach a consensus as to which Blocks are valid and which are invalid. They agree to this and update the block chain accordingly. There is a mechanism “proof of work” which takes around 10 min for a Block.

Why is it so popular?
Its popular because of
  • Bitcoin, lately getting huge traction due to its cyber economy and crazy valuation
  • Secured with maths, 256 bit encryption, making it difficult to crack the block
  • There is huge trust between the two parties due to immutable transactions, and no third party is required.
Why is it secured?
  • It is secured by cryptography hash, which makes it unique and technically tamper proof!
  • Distributed, it works on P2P network and anyone with right environment is allowed to join it as a new node in that n/w. Each node will receive a full copy of the Blockchain.
  • Proof-of-work: slows down creation of new block to 10 min, but then its to avoid tampering of block. Because to tamper one block, you will have to recalculate all the following blocks and that would be just too much time consuming and the blocks are distributed across the network.
Adding new Block works on consensus by all the nodes on the n/w. Any tampered Blocks would be rejected by the nodes.
To tamper any existing block successfully, you will have to tamper all the subsequent next blocks in the chain, redo their proof-of-work and take control of more than 50% of network to get the consensus. This sounds theoretically possible and the thread is terms as "51% attack" by bitcoin itself. But then so far it has never been successful and just proved the concept in the labs.

How easy is it to implement?
  • You can create a Blockchain conceptually using simple programming language. There are bunch of open source codes available on Git to start with.
  • There are also third party providers like Etherium which offers Blockchain based platform featuring smart contract. It is also open source and written in C++, Go and Rust programming languages.
  • Etherium is offering partnered solution on AWS which anyone can subscribe and consume.
  • These are just a few and you can find many more solutions on Git & Bit-bucket and the likes.
Potential industry applications?
I am listing down a few industries although its applications can be limitless:
  • Government sector (All personal identities can be stored, Onename is doing that.)
  • Insurance sector
  • Property registration
  • Vehicle registration
  • Medical records
  • E-notary
  • Collecting taxes
Conclusion
Blockchain is an algorithm (or an idea) of storing the data and there are various implementations available in the marke
This is just a beginning and in a few years, because of secured, and eventually matured systems, you would see Blockchain (or tangle) being a widely accepted norm across the sectors and role of intermediaries could shrink or change.

Comments

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