A blockchain is a chain of blocks that contain information. It is a distributed ledger that is completely open to anyone with a unique quality, once data has been recorded in it; it becomes very difficult to change it. The blockchain is not the same as Bitcoin, think of the blockchain as a smartphone, and then the bitcoin as only one of the many applications that can run on the operating system.
What Is Blockchain
Blockchain can also be defined as a shared, distributed ledger that aids the process of keeping track of transactions in a business network or otherwise known as the underlying digital foundation that supports applications such as bitcoin. Almost everything of value can be tracked on a blockchain network, reducing risk and also cutting costs for everyone involved. Logically, it’s safe to assume that what the internet did to information is what bitcoin is to pay and this is all thanks to the Blockchain.
The Blockchain has applications that go farther than the obvious like online currencies and cash transfers. There’s electronic voting, smart contracts, and digitally stored property assets to health record management and proof of ownership for digital content. The blockchain will bring positive benefits by eliminating third-party intermediaries including banks, finance, real estate, legal, insurance, the health and public sector. Perhaps most importantly, it will give people who have restricted exposure to the global economy, stronger protection against exploitation and corruption, better access to payment and financial systems.
Imagine a digital Jamb record, shouldn’t be too hard to do so: each entry is a block. It contains your result, the date and time when the result was created. And by design, that result cannot be changed, because we want a better result or we paid off somebody, etc. Only the computer, who has one private key, and the student, who has the other, can access the information, and the information is only shared when either you or the computer share your private key with a third party – say, your parents or friends. The above example describes a blockchain but really, how does it work?
How does the Blockchain work?
In the past, when it comes to dealing with money or anything of major value, businesses and people relied heavily on third-party intermediaries like banks and governments to ensure trust. The third party intermediaries perform important tasks that help build trust between the two parties into the process of transaction such as record keeping and authenticity.
Blockchains are very secure databases. You should know that as a matter of fact by using a blockchain system, bitcoin became the first digital currency to solve the human double spending (the act of spending the same unit of value more than once) problem without using a central server. The proposed bitcoin system was innovative but it was the mechanics of how it worked that was truly out of this world or you could say the technology that laid behind it which bis known today as the blockchain technology. The blockchain is managed by a peer-to-peer network sticking firmly to a protocol for confirming new blocks.
One example of the evolution and broad application of blockchain, beyond digital currency, is the development of the Ethereum public blockchain, which is providing a way to execute peer to peer contracts. – Collin Thompson, Blockchain Product Designer & Growth Marketer.
The blockchain stores transaction data – in blocks that are linked together to form a chain. As the numbers of your transactions grow, so does the blockchain. Each block contains data, hash of the block, and hash of the previous block. The data that is stored in the bitcoin blockchain is the details of the transaction such as the sender, the receiver and the amount of coins sent, which are then logged into the blockchain, within a peculiar network governed by rules approved on by the network participants or the parties involved.
The hash of the blockchain can be compared to a fingerprint due to its unique character. It identifies a block and all of its content. Once a block is created its hash is been calculated, in other words changing something inside the block will cause the hash to change.
The hash of the previous block connects the blocks together and prevents any block from being tampered with or insertion of a block between two existing blocks. No one sitting close to his computer with evil intent can just decide to hack or mess with the hash. The security process is really a tough nut to crack. This is done so that, the following block strengthens the verification of the previous block and hence strengthens the entire blockchain.
Because every transaction builds on the previous transaction, any corruption is visible and everyone is made aware of it. Likewise, blockchain builds trust through its following characteristics:
- The ledger is made visible to the public, updated with every transaction, and well replicated amongst network participants in near real time.
- The only way a transaction can be tampered with is only with new transactions.
- Blockchain permissions prevent unauthorized access to the network and ensure that participants are who they really say they are.
- Transactions can be validated without the need for a third party intermediary. Both parties already have access to the same records.
- Both participants must acknowledge that a transaction is valid before an exchange can occur.
- The blockchain is really flexible and very easy to use.
- Final Thoughts
People and majorly small businesses may have yet to fully accept these blockchain services but the potential of outgrowing everything ever imagined is truly there. Blockchain is getting ready to change the way the world handles money or transactions. Like any growing technology, no one can utterly predict the future of the blockchain technology. All anyone can do is speculate, but one thing is certain or rather one thing everyone agrees to be the fact is, the blockchain technology is not just for trading black-market goods and services.