One thing you will always hear when talking about cryptocurrencies is blockchain. It is consistently cited as the reason for making sure crypto transactions are secure and tamper-free. In trying to understand crypto and its basic function, learning its core element is very important.
Casino Days India is here to explain what blockchain is and how it works to ensure the security of peer-to-peer crypto transactions all over the world.
What is blockchain?
Blockchain was initially created as part of a proposal for Bitcoin. As it was always intended, it enables the peer-to-peer distribution of a public digital ledger free from interference from intermediaries and third parties.
In the blockchain, data is recorded on what you call ‘blocks’ and everyone who is part of the specific network will be given a copy of the digital ledger. This ensures the transparency of every transaction made, greatly minimizing the risk of data manipulation and tampering.
How does the blockchain work?
Although data transfer through blockchain sounds complicated, it is honestly quite simple. Transactions can be explained in four steps, such as:
Authentication
At the start of the transaction, users need to input information in the blockchain that will be authenticated through cryptographic keys. This is a string of information or letters to encode and decode data.
Every user has their own private and public key, which contains protected digital signatures to authenticate information and execute transactions.
Transaction approval
Once an agreement has been made between both parties involved, the next step is to get the transaction approved. The decision is made through the consensus of all nodes within a blockchain.
‘Nodes’ refer to the connected devices owned by stakeholders within the network. It is used to keep track of the transactions and communication in the blockchain.
Updated ledger
Once all the steps are accomplished, the updated digital ledger will be distributed within the network.
Types of Blockchain
Blockchain can be categorized into four different structures. These are:
Public blockchain
As the name suggests, a public blockchain is a network wherein anyone is free to join. It is the truly decentralized form of blockchain wherein all nodes have equal rights.
Anyone can access the blockchain, add blocks of data, and validate data as needed. Several cryptocurrencies such as Bitcoin, Ethereum, and Litecoin make use of public blockchains.
Private blockchain
A private blockchain is a network managed by a single organisation that can decide the use and access within the network. It may also be referred to as managed blockchains. In this instance, there is a central authority that grants access to notes and controls the functions they can do.
Consortium blockchain
The consortium blockchain was created to solve the drawbacks of both public and private blockchains. It is managed by a group of organizations instead of a single one and allows the blockchain to have more of a decentralized system compared to private blockchains.
Hybrid blockchain
Alternatively, a hybrid blockchain is a structure in which a single organization controls the blockchain. The key difference compared to the other types of blockchain is that in hybrid, a public blockchain is allowed to validate transactions within the hybrid blockchain.
Other uses for blockchain technology
Although blockchain is primarily used for crypto, it has the potential to expand to other industries. Currently, moves to incorporate blockchain in several other industries have already begun.
Let’s look at some industries that can improve their services with the help of blockchain technology.
Medical field: Increasing healthcare functions
An important aspect of healthcare is ensuring that sensitive patient records remain private. Blockchain technology can help facilitate a secure network among health organizations to keep patient records safe through complex algorithms.
Additionally, blockchain technology can help streamline the process of confirming the credentials of possible hires in the medical field. Additionally, healthcare institutions can log staff information within a shared blockchain and that can be accessed if the need for verification arises.
Media: Protecting copyright and royalties
With the way the internet is being used today, lines have been blurred when it comes to copyright protection and royalties. While there are laws in place to protect copyrighted work, it is largely ineffective online since it’s hard to trace the origin of reproduced content.
A ‘hash’ or codes that make any attempt to change or manipulate an existing block easily detectable. It is useful in protecting intellectual properties since all information and transactions are inputted on the blockchain. Additionally, this enables copyright holders to keep track of who has accessed the media and make sure it is not redistributed illegally.
Government: Eliminating voter fraud
Blockchain has been successfully used to improve old systems in place when it comes to data security. If used in government processes such as exercising the right to vote, it will allow more seamless voting measures and eliminate result manipulation.
This is especially useful for places wherein government trust is minimal. The public will be able to cast their vote without worrying over their ballots because they will be stored digitally and attempts to alter that data will be near impossible.
Future of blockchain technology
Data protection is possibly one of the most important things to focus on as the digital space continues to grow. In recent years, many people have become susceptible to identity theft, hacking, phishing, and several fraudulent activities.
Blockchain technology can be used on a wider scale outside of crypto to ensure that every single piece of data is protected and accounted for.
With recent developments in several industries, there is no doubt that blockchain technology will continue to be used in the future and likely develop further to provide positive advancement in online security not just when it comes to crypto transactions but many others.