DEFINITION:
Blockchain is a distributed, unchangeable ledger that simplifies the recording of transactions and the tracking of assets in a corporate network. Intangible assets can exist alongside tangible assets (such as a house, car, cash, or land) (intellectual property, patents, copyrights, branding). A blockchain network can track and sell nearly anything of value, reducing risk and cost for all parties involved.
IMPORTANCE:
The lifeblood of the company is information. The sooner and more precisely it is received, the better. Blockchain is ideal for distributing that information because it provides immediate, shareable, and completely transparent data recorded on an immutable ledger that network members with permission may only read. A blockchain network, among other things, can track orders, payments, accounts, and output. Furthermore, because members have a unified view of the truth, you can see all aspects of a transaction from start to end, providing you with increased confidence as well as additional efficiencies and opportunities.
DIFFERENCE BETWEEN BLOCKCHAIN AND DATABASE:
The structure of data differs greatly between a standard database and a blockchain. When a block’s storage capacity is achieved, it is closed and linked to the previously filled block, resulting in the blockchain, a data chain. All subsequent information is assembled into a freshly created block, which is subsequently added to the chain once it is complete.
A database normally organises its data into tables, whereas a blockchain, as the name implies, arranges its data into linked chunks (blocks). This data structure creates an irreversible data timeline when deployed decentralized. When a block is finished, it becomes permanent and is added to this timeline.
HOW DOES IT WORK?
In this sense, a blockchain serves as the foundation for immutable ledgers, or records of transactions that cannot be altered, erased, or destroyed. As a result, blockchain technologies are sometimes referred to as distributed ledger technologies (DLT). The blockchain concept was first proposed as a research project in 1991, predating its first popular implementation in 2009: Bit coin. Because of the creation of different crypto currencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts, the use of blockchains has risen tremendously since then.
IS BLOCKCHAIN SECURE?
To begin, new blocks are always added in a chronological and linear order. To put it another way, they are always added to the “end” of the blockchain. It is extremely difficult to change the contents of a block once it has been appended to the end of the blockchain unless a majority of the network agrees to do so. This is because each block has its own hash, as well as the hash of the previous block and the previously specified date. To generate hash codes, a mathematical function turns digital information into a string of numbers and letters. If that information is altered in any way, the hash code will be altered as well.
BENEFITS OF BLOCKCHAIN:
- Chain Accuracy
This virtually removes any human involvement in the verification process, resulting in less human error and a more accurate data record. Even if a network computer made a computational error, it would only effect one copy of the blockchain. For that error to spread to the rest of the blockchain, it would have to be produced by at least 51% of the network’s computers, which is practically impossible for a big and increasing network like Bit coin’s.
- Cost Savings
Customers generally pay a bank to validate a transaction, a notary to sign a document, or a minister to perform a marriage ceremony. Blockchain eliminates the requirement for third-party verification and the associated costs. Because banks and payment-processing companies must handle the transactions, company owners, for example, pay a small fee whenever they accept credit card payments. Bitcoin, on the other hand, is decentralized and has cheap transaction fees.
- Transactions that are efficient
Transactions with a central authority can take many days to complete. If you attempt to deposit a check on Friday evening, the cash may not appear in your account until Monday morning. Unlike financial institutions, which are open during business hours, usually five days a week, blockchain is open 24 hours a day, seven days a week, and 365 days a year. Transactions can be completed in as little as 10 minutes and are secure in a matter of hours. This is especially useful for cross-border transactions, which frequently take significantly longer due to time zone variations and the requirement that all parties confirm payment processing.
Bottom line
A blockchain is nothing more than a shared database or ledger. Data is stored in data structures known as blocks, and each network node has a complete clone of the database. Because if someone tries to change or remove an entry in one copy of the ledger, the majority will ignore the change and reject it, security is ensured.