Decoding 'BlockChain' technology

Decoding 'BlockChain' technology

Decoding the Blockchain technology and understanding how they securely record, store and share data?

 

The way we access, use and store data has been evolving over the years. Initially we banked on a floppy disk, a CD, a USB flash drive, or an external hard drive to copy and transfer data. Then came the internet revolution and sending/ receiving files over the network and cloud storage services became easier and faster. However they still had their share of drawbacks and threats! Threats of data being stolen, copied and destroyed without any backup. File contents being revised and shared multiple times created confusion within team members. We could not be sure at times if we really possessed the latest data backup or an earlier version. 

 

And then came the era of Bitcoin which was invented in early 2009. It revolutionised the way data would be recorded, stored and shared. Blockchain technology was originally developed as part of the digital currency Bitcoin. But the two are not the same. A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively.  These transactions can be any movement of money, goods or secure data, ranging from a supermarket purchase to a confidential assignment of a government ID number.

 

How do Blockchain technologies change the way data is recorded, shared and stored?

 

A Blockchain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. {Being first used since the Roman era, Cryptography is a method of hiding information to keep its content safe and secret. The encrypted message can be read only by the sender and the intended recipient.} 

 

Blockchain is designed to store information in a shared and continually reconciled way so that only the intended recipients can access it and makes it virtually impossible to add, remove or change data without being detected by other users in the network. It has its own share of benefits. The blockchain database isn’t stored in any single location unlike the traditional way, meaning the records it keeps are hosted on a million computers in the network and are publicly and easily verifiable. Since the data is not stored at a centralized location, it makes it impossible for any hacker to corrupt the data. 

 

How does Blockchain technology work? 

 

A blockchain gathers and orders data into blocks, and then chain them together securely using cryptography. Blocks hold batches of valid transactions that are hashed and encoded. Each block includes the cryptographic hash of the prior block in the blockchain, linking the two. The linked blocks form a chain. The key to a blockchain's security is something called a ‘hash’. Each transaction in a block is time-stamped. {Time-stamping is the process of securely keeping track of the creation and modification time of a document where no one should be able to change it once it has been recorded.}  These blocks are shared with other computers in the blockchain network. When a block is complete, it also gets its own time stamp. So all information is sequential, which helps avoid duplicate entries. The completed block is now appended to the chain in the network. Other participants in the network may be sending out their own blocks at the same time. But the time-stamp ensures that the data is adopted in the right order and all participants have the latest version. Since all participants have a copy of the entire blockchain, they can detect any tampering.

 

What does this have to do with Bitcoin?

 

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The system was designed to work as a peer-to-peer network, a network in which transactions take place between users directly, without an intermediary. Bitcoin used the vblockchain technology not only to create both the most powerful computer network in the world in under 10 years, but also the most secure financial system the world has ever known. Some accounts in the Bitcoin network contain nearly a billion US dollars of equivalent value in a single account, but so far nobody has figured out how to break into it, no vaults or security guards needed!

 

Bitcoin and other blockchain-based cryptocurrencies is far more secure than any bank in the entire world. It has made the banks jittery and understandably so since some banks are now concerned that their business model will go become extinct.
 

Source: Business Today
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