In this post on Understanding Blockchain Concepts, I will explain what is blockchain and its application.
What is a Blockchain?
Basically, a blockchain is a distributed database. Significantly, Decentralization and Scalability are the two most important features of a Blockchain.
As the name suggests, a Blockchain is a chain of blocks with each block containing some data. However, in each block of a Blockchain, there is not only the user data but also the hash code of the previous data block as well as the hash code of the current data block.
In order to build a blockchain, we need to create the blocks and append these blocks in the chain. The following figure shows a minimal block in a blockchain.
Since, a block in a blockchain is a simple data structure, it is very easy to implement. As I have said earlier, each block of data also contains the hash of the previous block. It makes blockchain highly secure.
For instance, if any body tempers with any data block, the tempering is easily detected. Because, the previous hash contained in the tempered block doesn’t match with the calculated hash of previous block, it is easier to identify the tempering. Moreover, the hash of subsequent blocks are also no longer valid.
Additionally, if hacker tries to recompute hash of all blocks in the the chain, it is still impossible to compromise the entire blockchain. This is because the blockchain is decentralized and there are chances that the hash is computed before the hacker performs recalculation of hash for each block in the chain.
Applications of Blockchain Technology
Although Blockchain technology has many applications in various fields such as finance, trading, agriculture, governance, healthcare, and banking to name a few, some specific applications are discussed below.
In fact, new business models are emerging from the use of Blockchain technology. Particularly, it happens because now individuals can not only record their transactions and agreements but also are able to secure them.
- Since blockchain technology offers greater security, it has applications in online payments, especially in cross-border payments.
- Another important application of blockchain technology is in the healthcare sector since it preserves the privacy of medical records of patients.
- Similarly, by supporting the end-to-end shipping process, blockchain can be used to secure supply-chain.
- Blockchain technology helps in governance by securing government documents.
- It also helps in preventing the piracy of intellectual property.
To sum up, in this article on Understanding Blockchain Concepts, the architecture and applications of Blockchain technology are described. While, an example of implementing a blockchain is given in the next article.
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