Table of Contents
- 1 Fundamentals
- 2 Features
- 3 Impact
- 4 Enhancements
- 5 To Sum Up Blockchain Fundamentals, Features, Impact and Enhancements
Decentralization is only one of many traits that blockchain has, yet this alone is more than enough to justify this incredible creation. An innovation, that’s what blockchain is, and for a decade, it has redefined how people look at online payments and transactions in general.
At its core, blockchain is a technology meant to promote peer-to-peer communication and transaction between anyone across the world wide web. In this ledger, every action is secured; that’s why it is only common for people to trust blockchain with their transactions. You can see this technology being used mainly in cryptocurrency platforms such as Bitcoin and Ethereum.
A blockchain is made up of many individual blocks linked together, making a chain; hence why it is named blockchain. Almost anything can be inputted in a new block; however, there are certain limitations to it; that’s why it is currently commonly used as a ledger for different types of transactions.
We want to share this greatness with everyone; that’s why we have created this article to spread more information about the beauty behind blockchain.
This section will talk about the fundamentals of blockchain and how these characteristics make the technology unique and revolutionary.
Public Key Cryptography
The purpose of cryptography in the blockchain is to provide a robust outer layer of security. Public-key cryptography, in general, has already been used in many concepts; message encryption, digital signature generation, and message verification.
In a blockchain, public-key cryptography provides the users or clients of the platforms with two keys, one that is meant to be kept private and one that can be broadcasted publicly. Each is very important, and blockchain works accordingly because of them.
A private key assigned to a client is composed of randomly generated numbers that are unique to everyone. It has to be kept in secret all the time as it also acts as an identity for clients. Private keys are meant to be used for message verifications, ensuring that the destination is correct and the message will be delivered successfully and accurately. A private key can also be used to provide a digital signature.
A public key provided by the blockchain is often the source of the address where anyone can initiate a transaction with you. Like the private key, it has to be unique to determine the identity and keep things organized.
Public key cryptography involves math, mainly complex math problems, rather than simple to process ones. Think of it as an impossible challenge, making the system much more secure than other options that even a computer will struggle to solve.
Cryptography is also responsible for providing hash results, which is a data output that is 64 characters long. This ridiculous number of characters is the main reason why, until now, no one has ever compromised a blockchain.
One of the reasons why blockchain is considered a true innovation of the decade is its shared ledger. Everyone who has access to the internet can be a part of any blockchain network, and this also means that you’ll be sharing your data with all these people who are part of a blockchain. As a decentralized ledger, all data are multiplied in many copies, existing in many computers at the same time, globally. Opposed to a centralized ledger, a decentralized one is very difficult or almost impossible to hack by a computer since data doesn’t just sit in one place.
This concept is essential and is why cryptocurrency works and has flourished for almost a decade. Take Bitcoin as an example. Not all people expected it to blow up on its conception, but time proved its use, security, and potential, to which, in return, its value increased consistently. Having multiple copies of data in different locations all at the same time prevents malicious claims as it can easily be verified with all the data available.
Although it is common to see blockchains without permissions, some are still developed with permissions included. Blockchains without permissions are arguably safer than those that have permissions because more people can join the platform; hence multiple copies of data can be generated and stored in different locations all at the same time. On the other hand, blockchains with permissions are much more susceptible to security risks since not many people are present to verify transactions. There’s not much data available to cross-check if the claims are valid or correct.
Blockchains with permission policies are also much more in control of their members, sometimes providing limits and imposing specific rules, which is not a useful feature if you want something that can be trusted. Although there will be no too few people who will be making fake claims in a blockchain with permissions, there are still some security risks involved, thanks to the possible number of people inside the blockchain.
Blockchain transactions are resolved and are being uploaded to the system because both parties that are involved have agreed upon or have reached a final agreement with the transaction. However, a consensus isn’t a written or a verbal action that needs to be taken by anyone; instead, it works through an algorithm. There’s no official consensus algorithm that is being used by all blockchains, but rather, there are many options that have been developed. Although their processes differ from one another, all of them are still ending to provide consensus to blockchain users.
Here are some examples of consensus algorithms that are widely used in the industry:
- Proof of Authority
- Proof of Elapsed Time
- Practical Byzantine Fault Tolerance
- Proof of Stake
- Proof of Work
In this section, we will explain the standard features that a blockchain system would have.
Since a blockchain is composed of many nodes or devices scattered globally, each transaction should first be verified by different nodes for it to be added to the ledger. To add to that, each node has copies of the ledger, so it is indeed hard to corrupt the system or even enter it to perform a hack.
Security in the blockchain is very different, as no one is really in control of everything. Compared to other data storage structures, blockchain is superior in terms of security because of its decentralization. It is also worth noting that a blockchain is very welcoming to different security types. Hence, it is straightforward to install another layer of protection to improve its performance and benefit its users.
Blockchain’s transparency is also one of the reasons why it is deemed incorruptible. However, it is not a good advantage for private institutions and businesses since most of their data are very sensitive and shouldn’t be shared with the public. It is the case for a public and wide-spread blockchain where everyone on the internet can join without too many restrictions. Businesses and services like banks and other monetary institutions can start a private and close-scoped blockchain so that only those permitted to view the data are inside. As aforementioned, this is very similar to a blockchain with permission.
We can use a bank as an example and comparison for blockchain. Banks’ systems worldwide are still relatively slow; However, there have been great strides in technology. It has remained slow because of how important data is for banks, and they don’t want everything to be compromised if they hasten the transaction.
In a blockchain, since everyone can participate in verifying blocks and acting as nodes for transactions, it has become an ideal system for cryptocurrencies. It is also worth noting that Bitcoin, a cryptocurrency, is why blockchain has been introduced in the spotlight. Bitcoin is an online currency that exists digitally. Even though plenty of cryptocurrencies are being made with faster transactions, Bitcoin is still relatively faster when compared to a bank’s transaction time.
Blockchain has been synonymous with cryptocurrency for a long time now. We can’t blame the people since the technology has been widely introduced mainly because of Bitcoin. However, blockchain is still a technology, and it can be used in many other ways, not limited to only cryptocurrency platforms. In this section, we will discuss the impacts that blockchain has made and future ones that are possible to happen.
Online Payment Solutions
There’s no going further on the impacts of the blockchain as there’s already a prominent industry that is flourishing all because of this technology. Cryptocurrency, in general, has thrived and is currently one of the leading and secure options in the online realm. Bitcoin, in particular, is still widely used by many, and although limited, many people are even partaking in it, and it is still increasing in popularity.
As we have discussed earlier in this article, blockchain offers a much faster transaction time when compared to banks. That is why recently, many banks have started working on the implementation of blockchain into their systems. When different institutions have widely practiced this, we can enjoy faster banking transactions and much secured ones.
The thing about blockchain is that it is very flexible. It’s not limited to computers when it comes to designating nodes, as cloud technology can also be used as another way to verify data and avoid potential breaches. Common cybersecurity solutions are a costly venture, and it is often very susceptible to hacks and leaks because of its structure and vulnerability. With blockchain’s decentralized nature, the chances of having any data loss, corruption, or even hacking are close to none.
Internet of Things
The internet of things or commonly referred to by many as IoT, is starting to become a thing, thanks to wireless technology that different companies have also given much attention to; hence, its progress is again beginning to climb fast. Although it has received so much upgrade, IoT is still not in its operating prime and is still susceptible to many faults and potential errors. Wireless technology is the culprit here, and even if all things are connected physically, everything is still centralized, one thing that makes it easier for hackers and malicious people to compromise.
While it is still not widely implemented yet, blockchain can give the IoT a brighter future because of its security features.
Crowdfunding and Donation Drives
It is common for donors and ordinary people to wonder if the amount they have donated is being used for the indicated purpose. Back then, there’s no real way of telling if the donation has been passed through the donation target that you have in mind. In other words, transparency was very hard, and even if the organizers loved to, it would take some time and effort to do so.
Blockchain solves this problem by providing a transparent ledger, where all the donations would go through. A good example would be the World Food Programme organized by The United Nations, which has already utilized blockchain technology to make food purchases a lot easier.
This section will explore some enhancements to blockchain technology, including some companies and entities that are vowing to make more improvements to it.
Throughout the years, there are many attempts to improve blockchain’s entirety without destroying its identity and legacy. One of the most critical strides that blockchain has encountered is the improvements in its resiliency and how the platforms handle failures, in case there are some. Resiliency is vital as it gives any platform the ability to work still even if everything starts to fail.
Better Data Encryption
Data encryption has been an enormous deal to cryptocurrency because it is starting to gain more popularity. More businesses are turning to use them and implement them in their systems. That’s why better data encryption has always been in the works to maintain the trust of many institutions and companies willing to take a risk in blockchain technology. However, considering how better blockchain has become, we can drop and not define blockchain as a risky investment.
Integration for Corporates and Enterprises
Since blockchain technology has shifted way more than anyone could have expected, many enhancements are dedicated to integration to make it a lot easier for enterprises and other companies to use blockchain and gain benefits. These integrations are already preconfigured and are meant to work for current systems that many enterprises are using.
With its increasing demand, blockchain is suffering from scalability issues, especially for more prominent corporations and enterprises aiming to use them for their operations. By adding more options and features, the technology has reached a peak in scalability.
Sharding can be classified as another form of scalability, but we think that it needs its part because it is a strategy that is worthy of being discussed. Sharding is a way for developers to increase the amount of work that a blockchain can produce. Sharding redirects the workload of nodes into shards. Each node is only dedicated to maintaining information that is from their shard. It is all about partitioning data and making sure that it is still accessible by different devices.
The truth about the blockchain’s number of nodes is that their number doesn’t correlate with scalability; however, more nodes still means that security will be tightened even more.
Several developers may have already used sharding. However, it is still in its infancy, and more developers are still researching how to further its effects and improve its current visible benefits. Sharding is also a way to prevent blockchain bloating when so much data and information are stored in blocks, and loading them in different nodes would take so much time.
While one of the reasons to use Bitcoin and other cryptocurrencies is speed, there are still some cases where they took too long to process, mainly because of how many people are using the platform all at the same time. In theory, they would be lightning-fast in their desired function, but the number of people involved is just too much and is unexpected by the system. Up until now, Bitcoin is still highly populated, and transactions are suffering because of traffic.
This problem has already been discussed for a very long time; that’s why many new and emerging cryptocurrencies address this by providing better hash solutions and incorporation of better transaction processing, for example, by using another consensus algorithm.
MetaHash is also another excellent example of this, as it is based on blockchain technology 4.0. The developers understand the need for better speeds in blockchain; that is why MetaHash is currently considered one of the fastest solutions to use when it comes to blockchain.
Up to this point, there are still many people out there that are foreign to the concept of blockchain. They can’t be blamed since blockchain is quite confusing to understand with all the terms and ideas presented all in one go. Misinformation is also the reason why not a lot of people are using products with blockchain technology. Ignorance can often leave people intimidated and unsure if they want to be part of something.
Many blockchain enthusiasts and advocates have partially solved this by providing more informational resources to the masses, all for free. These include seminars, e-books, and courses, and they are widely available online; you have to search them.
Exposing many people to the blockchain is also a brilliant move as it can indirectly help the security of platforms running the technology.
Consensus algorithms are already predetermined before a platform or network is being built. In some cases, an absolute consensus is best to use, so swapping them is much needed. Although this hasn’t been done yet, it will be exciting soon, and it will significantly change how blockchains will be developed.
Some companies and business entities have pledged some efforts to improve blockchain and push it to gain more potential.
Microsoft’s contribution to Ethereum has been very massive throughout the years. By helping Ethereum reach another level, Microsoft is also making blockchain a better technology, and luckily, it is also one of their goals. The Azure Blockchain Workbench and Azure Blockchain Service are mainly the ones that Microsoft is investing in because of their future potential.
It is also worth noting that the Azure service has joined Hyperledger, a group or family of blockchain developers that pledge to share their codes and innovations with others to help blockchain even achieve better things.
Amazon Web Services
Azure and Amazon Web Services aren’t that much different from one another. Both corporations are also displaying a lot of interest in blockchain and have since implemented the technology into their system. In case you missed it, Amazon Web Services have also unveiled and offered Managed Blockchain to their audiences, which is an excellent service for network management.
IBM Cloud is perhaps one of the most important members of the Hyperledger, as they are the ones who are primarily maintaining the Fabric and its source code. The Fabric is a framework for blockchain that includes modules essential for developing blockchain-based services and products that are very hard to startup.
IBM has also allowed other cloud providers to be used in their Blockchain 2.0 instead of an exclusive cloud provider. It will then open more possibilities than ever before and enable the blockchain to progress in the cloud even faster.
VMWare is a service provider built for blockchain particularly, and the developers behind it are explicitly seeking to fix the problems of blockchain when it comes to infrastructure. Their answer is Concord, an efficient infrastructure perfect for consensus algorithms and smart contracts.
To Sum Up Blockchain Fundamentals, Features, Impact and Enhancements
Blockchain has already existed pre-cryptocurrency, yet it is only in the year 2008 where it gains relevancy; of course, all with the help of Bitcoin. Many people and specifically large corporations, saw the potential in this technology, and throughout the decade, blockchain has gained much attention and is currently set for mainstream use. Although blockchain is still not a perfect technology, it’s already something that provides value to many. It’ll surely progress into a much better invention that many people will remember for a very long time when given more time.