Researching of Blockchain Technology

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Overview
How the Blockchain Works
Blockchain Uses
Real-World Applications
Conclusion
References

Introduction

Blockchain technology is a decentralized, distributed ledger that records transactions and monitors assets across a peer-to-peer network. It is a system that maintains track of any digital data or assets exchanged through a network. Transactions are securely stored in a peer-to-peer network of computers using a hash, an encryption signature, on a blockchain. The blockchain’s security is improved through hashing, which converts all data into characters. Each device contains a complete copy of the blockchain. In addition, all new data added to the network is updated on all nodes simultaneously. The updates occur across all devices in the network, thus making it hard to hack the blockchain. Satoshi Nakamoto advocated the blockchain in 2008 to act as the public record of Bitcoin, the first digital currency. The decentralized concept eliminates bureaucracy as no central authority controls the network, thus increasing autonomy in transactions.

Overview

Blockchain technology has a fixed record; no user can change the data. The network requires entities to create new transactions to change incorrect transactions. Both transactions are accessible to users on the Blockchain. Blockchain users have access to the distributed ledger and its records. Blockchain is secure as it uses cryptography and encodes the transactions; thus, an entity can only verify the transaction without a detailed copy of the transaction (Leible et al., 2019). The blockchain is decentralized; thus, there’s no central point of control. Users’ mutual consent is required to conduct transactions on the blockchain.

Blockchain technology can be public, private, or developed by a consortium. A public blockchain is open-source; thus, anyone can access and engage in the network. A public blockchain has low operational expenses because no servers or system administrators are required. Its drawbacks include the need for a lot of computing power, the lack of anonymity for transactions, and the lack of security (Chen, Xu, Lu, & Chen, 2018). Access is restricted to entities involved in a contract in a private blockchain. One entity governs the network, executing the consensus algorithm and maintaining the distributed ledger. Only authorized nodes can record transactions in a private blockchain.

A consortium blockchain is a private blockchain managed by many entities. Only prior approval or voting can allow entities to join the network. Permissions are granted to individuals in this form of blockchain by a group of companies. In addition, only consortium members can make, validate, and renew the transactions. A permission blockchain features entail the use of ledger administrators who determine the scope of users’ accessibility. There are specific users who access the system using unique digital identifiers.

How the Blockchain Works

Nodes, blocks, and miners must all be present for a transaction to take place on the blockchain. The decentralized blockchain system relies on nodes since no single device can own the network. They can assume different roles, such as storing the blockchain and propagating new blocks and transactions to the blockchain. They do this by either directly satisfying the terms of the consensus algorithm or by outsourcing that part to other computers that do not directly participate in the network.

A block is a single atomic unit of transactional records in a blockchain. This is where blockchain records transactions in a digital ledger and keeps track of them. The role of blocks in the network can be distinguished between the genesis, legitimate, and orphan blocks. The genesis block is the founding block in the network and does not have any parent block attached to it. All other blocks which are created are sequentially added to this block (Zheng et al., 2017). Each block contains a timestamp, a previous block’s hash, a transaction record, and a nonce. When a new block is added to the blockchain, miners compete to find a valid hash for it by trying different combinations of the nonce and timestamp. The blocks on the blockchain are linked through hashing, a process in which one can input a variable-length input to get a fixed-length unique output through a one-way function. These can provide users with security as the hash functions produce a unique output for every block. If there is a change in the content of a block, it will break the chain. The hashing function enables anonymity on the blockchain since the ledger stores the hash of an entity’s wallet rather than personal details.

The blockchain process entails four critical steps, requesting, broadcasting, validating, and adding transactions to the network. Users are required to log in to their wallets using their unique encrypted keys. The user then requests to create a transaction over the network by creating a block. The request is transmitted over the blockchain to validate its claim (Pratap, 2020). The validation process takes the form of a peer-to-peer network consisting of nodes. A verified transaction can include digital assets like bitcoin or contracts. This means that the Blockchain consensus must be reached for a transaction to be validated. The nodes will approve a transaction once it meets the criteria set by the codified instructions. The approved transaction block merges with other blocks, thus continuing the development of the distributed ledger. Blockchain network development thus entails the addition of new blocks created by the system users. Each block in the blockchain contains the block’s hash and the previous block’s hash. After completing the approval process, transactions are added and thus stored on the blockchain, which cannot be changed. Each block contains a hash, a previous block hash, and a timestamp. The preceding block hash connects the blocks that create the blockchain network. It is impossible to change any block without affecting the entire chain since each block has the previous block’s hash.

Two main consensus protocols are employed in blockchain networks, including the Proof of Work (PoW) and Proof of Stake (PoS). The proof of work protocol requires miners to obtain the nonce for a block since only blocks with an authentic nonce can be affixed to the distributed ledger (Lasisi & Hsu, 2019). Miners generate datasets through mathematical functions to create a block. The block difficulty determines the target for the hash generated by the datasets. Mining drawbacks include environmental degradation as it uses a lot of power. In the Proof of Stake (PoS) consensus model, users can validate transactions based on how many coins they hold since participants can tie their coins to the network as collateral. Participants will have to invest funds by staking an amount for a chance to be picked as a validator.

Blockchain Uses

A basic idea of Blockchain is that it can be used for any function that requires a database. Blockchain technology may be used to compile data into a perpetual and transparent record. The most prominent use of blockchain technology entails smart contracts. Smart contracts enable developers to create decentralized power applications (Dapps) through smart contracts. Smart contracts are self-executing contracts in which the conditions of a purchase and sale agreement are coded in a blockchain network. These contracts provide a platform that anonymous parties use to conduct transactions without involving a legal entity.

Once the contract conditions are satisfied, the blockchain delivers cryptocurrencies to the appropriate party. Therefore, the self-executing protocol decentralizes any transaction regardless of its complexity. Dapps integrate smart contracts, thus giving users control over their data since there is no centralized system (Jeyabharathi, Kesavaraja, & Sasireka, 2020). Each application is open to use and can have its inbuilt cryptocurrency. The permissionless blockchain allows the creation and development of applications free from a central authority oversight. There are thousands of Dapps in finance, gaming, supply chain management, voting, healthcare, capital markets, real-time monitoring, cyber security, and the internet of things.

Real-World Applications

The real case uses of blockchain technology include decentralized finance, healthcare, real estate, supply chain, insurance, and voting. A Blockchain works as a ledger that helps to maintain a complete and verifiable history of data changes. It brings in transparency and data protection and removes the middle man that could cause corruption or bureaucracy. Blockchain technology is used to improve the efficiency of transferring funds between entities. The technology ensures faster and more secure payments using cryptocurrencies such as Bitcoin (Chen et al., 2018). Blockchain helps in maintaining the patients’ medical records prone to manual errors. As blockchain is fully transparent, the patients can view the qualifications of the doctors they consult and confirm authenticity.

Blockchain application in real estate promotes peer-to-peer communication, thereby eliminating the interruption of real estate brokers. In the absence of third parties, the costs of the assets are standardized as neither the buyer nor the seller has to bear extra charges. Lack of traceability is one of the significant issues the supply chain network faces. Blockchain implementation in the supply chain provides traceability and enables the network participants to track it down to its origin. Placing insurance claims is now simple with the smart contract of the blockchain. Under the supervision of blockchain, no fraudulence activity shall be carried out. People can vote digitally using blockchain technology, as its transparency enables regulators to determine whether data was changed on the network.

Conclusion

Blockchain technology refers to a distributed ledger that records transactions and monitors data across a decentralized network. Blockchain technology can be public, private, or developed by a consortium. The primary idea for adopting a Blockchain is to allow people, particularly those who mistrust each other, to share data securely. The decentralized blockchain system relies on nodes, blocks, and miners to validate transactions. Two main consensus protocols are employed in Blockchain networks, including the Proof of Work (PoW) and Proof of Stake (PoS). The real-world uses of Blockchain technology include decentralized finance, healthcare, real estate, supply chain, insurance, and voting. Blockchain technology is used to improve the efficiency of transferring funds between entities. The technology ensures faster and more secure payments using cryptocurrencies such as Bitcoin. It brings in transparency and data protection and removes the middle man that could cause corruption or bureaucracy.

References

Chen, G., Xu, B., Lu, M., & Chen, N. S. (2018). Exploring blockchain technology and its potential applications for education. Smart Learning Environments, 5(1), 1-10.

Jeyabharathi, D., Kesavaraja, D., & Sasireka, D. (2020). Cloud-based block chaining for enhanced security. In Handbook of Research on Blockchain Technology (pp. 171-181). Academic Press.

Lasisi, A., & Hsu, S. (2019). Consensus mechanism in enterprise blockchain. In 2019 IEEE International Conference on Intelligence and Security Informatics (ISI) (pp. 228-228). IEEE.

Leible, S., Schlager, S., Schubotz, M., & Gipp, B. (2019). A review on blockchain technology and blockchain projects fostering open science. Frontiers in Block chain, 16.

Pratap, Z. (2020). What is blockchain, and how does it work? FreeCodeCamp.org. Web.

Zheng, Z., Xie, S., Dai, H., Chen, X., & Wang, H. (2017). An overview of blockchain technology: Architecture, consensus, and future trends. In 2017 IEEE international congress on big data (BigData Congress) (pp. 557-564). IEEE.

Click Here To Order Now!