BLOCK CHAIN
by Cialfor
“The block chain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
– Don & Alex Tapscott, authors Block chain Revolution (2016)
Block chain is a technology that has gained popularity since 2008 when it came into existence along with Bitcoin. Interests in this technology have quite increased in the last few years. Many big organizations all around the world are already writing proofs of concept using block chain technology
Technically, it is a technology that uses peer to peer network to exchange data. It is used in a decentralized and distributed manner. Data in block chain is stored in the form of blocks. One of the fundamental examples that use this block chain technology is bitcoin.
Bitcoin uses block chain and cryptography to validate transactions; which is why digital currencies are often referred to as ‘crypto-currencies’. Bitcoin users gain access to their balance through a password known as a private key. Transactions are validated by a network of users called ‘miners’, who donate their computer’s processing power in exchange for the chance to gain additional bitcoins using a shared database and distributed processing.
“Bitcoin will do to banks what email did to the postal industry.” — Rick Falkvinge, Founder of the Swedish pirate party
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If we think about online money transfer, there is a bank which is a third party acting as a central authority which validates our transaction. Some problems may arise here. Firstly, the banks have access to our account information. Secondly, if bank servers crash, then the transactions fail to occur. These problems can be overcome, if we are able to remove the central authority which is done by block chain.
Block chains are decentralized, so there is no central authority. Every transaction is validated by a group of people, often called miners. Thus the authority is distributed. There is also no problem of server crash.
Block chain also provides security better than banks. Block chain, similar to Internet, does not have a single shutdown button. Cryptography is used for securing data. All the transaction data blocks are stored in encrypted form. Thus it is not visible to any unauthorized person.
Privacy is ensured by hiding the information of the clients. Transaction details only store the wallet address which is also in encrypted form.
In case of finance, even the most powerful financial servers can be hacked. Block chains do not have any single central server. So in order to successfully hack a block chain network, one will have to hack more than half of the nodes in the block chain.
Block chain also reduces the chance of double spending where a person is trying to send the same amount to different person at the same time.
Block chain is a revolutionary technology. This revolution has already started and growing exponentially.
It is going to affect the working of a lot of industries like finance, government and media. Certain researches have predicted that block chain is going to change our current methodologies involved in secure transactions, secure voting system and much more.
With such speed of advancement in this technology, block chains will be intertwined with our lives just as the Internet is now.
