Are you thinking about why using blockchain is getting famous day by day? Why are people getting obsessed with the use of blockchain and how it is applicable in our daily life? This article unleashes some of the top features of blockchain that may help you use it effectively.
In recent years, everyone has been discussing blockchain technology. It has been in the spotlight, especially for the last five years. People have mixed feelings about this technology, but no one can deny its role in the worldwide economic landscape.
Today, Bitcoin has become too volatile and overrated compared to other digital currencies. However, the talk about cryptocurrency has made people familiar with blockchain technology.
What is Blockchain Technology?
It is a system of transactions that cannot be tampered with or reversed. Blockchain technology allows two parties to get involved in a secure online transaction.
There is no engagement of a third party. It is an automated digital ledger that keeps track of all transactions through the network. It transmits these transactions on a peer-to-peer system on an extensive network of computers.
The transaction is said to be authentic if it is identical on all systems, making it more secure. It is tough to tamper with or falsify as each transaction is verified multiple times. This technology is named blockchain because there is an addition of a new block with each new transaction. This block links to a chain of other blocks that make up a transaction.
It is predicted that by the end of 2024, organizations are likely to spend $ 20 billion annually on technical services provided by the blockchain.
Why Using Blockchain Technology Getting Popular?
Blockchain technology is overgrowing, and people are incorporating this technology in different sectors. According to the latest statistics :
The best thing about blockchain technology is that it is multi-purpose. It is not just used for making financial transactions, but you can use it for several reasons, including payment verification via the supply chain, artwork tracking, recording and storing personal credit data, checking the flow of goods and keeping medical records.
Using blockchain technology, you can get rid of many issues such as lost data, net fraud, double spending, and high transaction fees. Here is why most people doing business are using blockchain technology and the reasons for its popularity:
- The participants involved in the blockchain transaction can verify the transaction's authenticity.
- It is an immutable public online ledger. Once you have recorded the transaction, you cannot change it.
- Due to the automatic update of the ledger, all the transactions are done transparently and instantly.
- Blockchain is very secure because of its encryption feature.
- There is no involvement of an intermediary as it is decentralized.
Applications of Using Blockchain Technology
Initially, blockchain was created in 2008. At that time, it was solely used for crypto transactions. However, today, it has a vast array of applications. This technology is used in different industries for many purposes, such as:
- High Security: It is impossible to falsify or modify any transaction in blockchain software. Thus, using blockchain technology offers a high level of security because it is validated several times.
- Accounting: You can use blockchain technology for accounting purposes, such as assisting ledger recordkeeping duties and automating assets.
- Smart Contracts: These contracts are written in coding format. These are based on agreed-upon terms between sellers and buyers and are self-executing contracts. The contract terms are trackable and irreversible. Thus, it does not need the intervention of a third party to carry out the transaction.
- Financial Services: Blockchain technology is also used in the financial services industry, for example, for credit scoring, auditing, compliance, and payment infrastructures.
- Storage Management: With the help of blockchain technology, you can save and store data in a decentralized network while using unused hard disk space of users globally.
You need to know several blockchain features to use them effectively. These features have made this technology irresistible for users. Let us discover each, one by one.
Feature of Using Blockchain Technology: Immutability
Among the many exciting blockchain features, "Immutability" is the most noticeable. The term Immutability refers to something that can't be altered or changed. Thus, one of the essential blockchain features ensures that the blockchain technology is an unalterable and permanent network. The question arises of how blockchain technology maintains this feature.
- This technology features a collection of nodes and does not depend on centralized authorities.
- There is a copy of the digital ledger with each node on the system. When a transaction is added, every node checks its validity. When the majority of nodes approve, it's added to the ledger. This makes it corruption-proof and promotes transparency.
- Another interesting fact is no one can alter the transaction blocks once they are added to the ledger. No user can update, delete or edit it.
Feature of Using Blockchain Technology: Decentralized
Blockchain technology is completely decentralized. This means there is no single person or governing authority looking after the framework. The set of nodes keeps the network decentralized. This feature is beneficial for users because you can directly access your assets from the store or web.
You can store valuable digital assets, starting from contracts, essential documents, and cryptocurrencies. You'll have direct control over them with the help of blockchain, using your private key. Thus, you have the rights and power over your assets by using blockchain decentralized features. Here are some of the top benefits of having a decentralized blockchain.
- The nature of blockchain technology is authentic and unique. Hackers can't crack it.
- Everything in this technology is organized. There is no involvement in human calculations. There are no chances of accidental failures, and the system is highly fault-tolerant.
- The decentralized feature of blockchain can survive any virus or malicious attack. It is less likely to break down because the system is complex and expensive for hackers.
- There is no third-party engagement, and the users have complete control, which makes it a transparent system.
Feature of Using Blockchain Technology: Improved Security
Since a central authority is absent, it isn't easy to alter any network characteristics for your advantage. The security of the system is ensured with the use of encryption. However, you may think, how does blockchain technology offer such a powerful security feature? This is possible because of cryptography.
Cryptography, along with decentralization, lays another layer of security for users. It serves as a firewall for attacks because of its complex mathematical algorithm. The information available on the network is disguised and hashed cryptographically. Therefore, the true nature of the data cannot be detected.
There is a distinct identification for every data, and every block present in the ledger has a different hash. So, if any user tries to tamper with the data, he will need to change all the hash IDs, which is technically impossible. You'll have a public key for making transactions and a private key to access the data.
Feature of Using Blockchain Technology: Distributed Ledgers
When you use a public ledger, it offers all information about the participant and a transaction. There is no way to hide it. The reason behind this is all other users on the system handle the ledger on the blockchain network. This leads to a better outcome because computational power is distributed across the computers.
When compared with traditional ledgers, the blockchain offers higher efficiency. Here is a list of advantages that this feature provides:
- The distributed ledger deals with any suspicious tamper or activity well in case of any suspicious tamper or movement. Everything in the ledger updates quickly, so no one can modify the ledger. This also makes tracking easier.
- The nodes in the ledger serve as verifiers. You will have to verify the transaction if a person wants to add a new block. Therefore, the user is given a fair chance to participate.
- The best thing about distributed ledgers is that no one is a favorite here. This means you will not get any additional favor. Every user has to go via the regular channels and add their blocks. So, nobody has more privileges or power.
Feature of Using Blockchain Technology: Consensus
The consensus algorithm is another feature of blockchain technology that thrives on this network. The architecture is amazingly programmed, having consensus algorithms as the base of the design. The consensus in every blockchain to assist the network make decisions.
If you want to understand it easily, consensus refers to a decision-making process on the network for the group of active nodes.
When the transaction starts, the nodes come to an agreement faster. A consensus is essential when millions of nodes work together to validate a transaction. This makes the system operate smoothly. It is a voting system where the minority supports and the majority wins.
There are several consensus algorithms for blockchain technology all over the world. Every algorithm has its distinctive way of making decisions and correcting previous mistakes.
Do you know every blockchain must have a consensus algorithm to keep the decentralization going, or its core value is lost!
Using Blockchain Features: Final Words
It is not that people will forget blockchain technology in a few days. It is not a trend but a beneficial technology that most sectors and businesses are adopting with time. With all its applications and features, it is predicted that the technology will stay here for long.
The features of blockchain have an outstanding level of impact on the web. Understanding the core features will help you to work on this technology effectively. No doubt, blockchain technology can change the world. The benefits can provide a shinier and brighter future for everyone.