Blockchain Explained: What you need to know

The Blockchain: What Is It?

A distributed database that is shared across all of the nodes of a computer network is what is known as a blockchain. A blockchain may be thought of as an electronic database that holds information in a digital format. Blockchains are perhaps best recognised for their essential function in cryptocurrency systems like Bitcoin, in which they are used to keep a record of transactions in a way that is both safe and decentralised. The innovation that is brought about by a blockchain is that it ensures the accuracy and safety of a record of data and establishes confidence without the need of a third party that can be relied upon.

The way in which data is organised is one of the primary distinctions that can be drawn between a traditional database and a blockchain. A blockchain organises the data it stores into groups, which are called blocks, and each block may store a specific set of data. When a block’s storage capacity is used up, it is sealed off and connected to the block that came before it. This creates a chain of data that is referred to as the blockchain. Blocks have different capacities. All of the newly received data that comes after a block that has just been added to the chain is assembled into a newly formed block, which, after it is complete, is likewise added to the chain.

With a database, the data is often organised into tables, but in a blockchain, the data is organised, as the name of the technology suggests, into chunks that are connected together called blocks. When implemented in a decentralised manner, this data structure automatically creates an irreversible chronology of data. When a block is completely filled, the information contained inside it is immutable and is added to this timeline. When a new block is added to the chain, that block receives a precise time stamp that is associated with its addition to the chain.

Key Points
  • When compared to traditional databases, blockchains store data in blocks that are subsequently linked together via encryption, as opposed to the rows and columns seen in traditional databases.
  • A new block of data is created each time new information is received. For chronological purposes, all blocks are chained together after they are filled with data and linked to one other.
  • The most popular application of a blockchain so far has been as a transactional ledger, however other sorts of information may be recorded.
  • To ensure that no one person or organisation has influence over Bitcoin’s blockchain, the technology is deployed in a decentralised manner.
  • Data put into a decentralised blockchain cannot be changed because blockchains are immutable. A permanent record and public access to a person’s Bitcoin transactions are the result of this.

What is the Function of a Blockchain?

The objective of blockchain technology is to make it possible to preserve and disseminate digital information while preventing its modification in any way. In this sense, a blockchain serves as the basis for immutable ledgers, which are essentially recordings of transactions that cannot be changed, erased, or otherwise destroyed. Because of this, blockchains are also sometimes referred to as a kind of distributed ledger technology (DLT).

Decentralization of the Blockchain

Imagine that a certain business has a server farm that contains 10,000 machines that are utilised to manage a database that contains all of the account information of the company’s customers. This corporation owns a warehouse facility that houses all of these computers under one roof, and it exercises complete authority over each of these machines as well as the information that is stored on them. On the other hand, this creates a vulnerability at a single place. What happens if there is a problem with the power at that location? What happens if its connection to the internet is lost? What will you do if it completely burns down? What if a malicious actor deletes everything with only one stroke of the keypad? In any scenario, the data has been distorted or lost completely.

What a blockchain does is make it possible for the data that is stored in a database to be distributed across numerous network nodes that are located in different places. This not only generates redundancy but also preserves the integrity of the data that is kept inside it. For example, if anyone attempts to edit a record at one instance of the database, the other nodes would not be affected, which would prevent a malicious actor from altering the information. If one user were to try to alter the record of transactions that Bitcoin keeps, all of the other nodes in the network would cross-reference each other, which would make it simple to identify the node that has the erroneous information. This approach contributes to the establishment of a precise and understandable sequence of occurrences. Because of this, it will be impossible for any one node inside the network to change the information that is stored within it.

Because of this, the information and history associated with a cryptocurrency, such as the transactions that have taken place, cannot be altered. A record such as this might be a list of transactions (like in the case of a cryptocurrency), but it is also feasible for a blockchain to store a wide range of other information, such as legal contracts, identity documents from a state, or the product inventory of a corporation.

Important

It is necessary for the consensus of the majority of the decentralised network’s computer power in order to verify any new entries or records that are added to a block. Proof of work (PoW) and proof of stake are two examples of consensus mechanisms that may be used to safeguard blockchains and reduce the risk of malicious actors confirming invalid transactions or carrying out double spending (PoS). These processes make it possible to reach a consensus even when there is not a single node in charge.

Transparency

As a result of the decentralised nature of Bitcoin’s blockchain, all transactions can be viewed in a clear and open manner by anyone who possesses a personal node or makes use of blockchain explorers, both of which make it possible for anyone to view transactions as they are taking place in real time. Every node in the network maintains its own independent copy of the chain, which is kept up to current whenever new blocks are validated and added. This indicates that you are able to follow Bitcoin wherever it goes if you so want to do so.

For instance, in the past, cryptocurrency exchanges have been targeted by hackers, causing users who stored their Bitcoin on the exchange to lose everything. The Bitcoins that were stolen may be tracked very quickly, despite the fact that the hacker may remain completely anonymous. It would be public knowledge if any of the Bitcoins that were taken in any of these attacks were to be transferred or spent elsewhere.

The records that are kept in the Bitcoin blockchain, along with the data held in the majority of other blockchains, are, of course, encrypted. This indicates that the identity of the record’s holder may be discovered only if the record is decrypted by the record’s owner (using a public-private key pair). As a consequence of this, users of blockchains are able to maintain their anonymity while yet benefiting from its openness.

Is There Trust in Blockchain?

The use of blockchain technology allows for the achievement of decentralised security and trust in a number of different ways. To begin, fresh blocks are perpetually kept in a linear and chronological order throughout the storage process. To put it another way, they are always appended to the “end” of the blockchain. Once a block has been put to the end of the blockchain, it is exceedingly difficult to go back and change the contents of the block unless the majority of the network has come to an agreement to do so. If this does not happen, then the block cannot be altered. This is due to the fact that each block includes not only its own unique hash but also the hash of the block that came before it as well as the time stamp that was discussed before. A mathematical function is used to generate hash codes; this function takes digital information and converts it into a string of numbers and characters. In the event that any of that data is altered in any manner, the corresponding hash code will also be modified.

Consider the scenario in which a hacker, who also operates a node on a blockchain network, has the intention of changing a blockchain in order to steal bitcoin from other users. If someone were to make changes to their own individual copy, it would no longer line correctly with the copies that everyone else had. When everyone else compares their copies to each other, they will see that this one copy stands out; hence, the hacker’s version of the chain will be disregarded as invalid when they make this discovery.

In order for such a hack to be successful, the hacker would need to simultaneously possess and modify at least 51 percent of the copies of the blockchain. This would allow the hacker’s new copy to become the majority copy and, therefore, the chain that is agreed upon. Due to the fact that they would now have different time stamps and hash codes, this kind of assault would also cost an enormous amount of money and resources, since the attackers would have to repeat each block from the beginning.

The costs involved in pulling off such a stunt are likely to be overwhelming given the scale of many cryptocurrency networks and the speed with which they are expanding. Not only would this be exceedingly costly, but there is also a good chance that it would be futile. The participants of the network would be able to witness such significant changes made to the blockchain, thus this kind of activity would not go undetected. After then, the members of the network would perform a hard fork off to a new version of the chain that would remain unaffected. Since of this, the value of the version of the token that was attacked would drastically decrease, rendering the attack ultimately fruitless because the malicious actor would be in possession of an asset that has no value. The same thing would happen if the malicious actor attacked the new Bitcoin split that was created. Because of the way it is constructed, participating in the network is far more economically beneficial than attempting to disrupt it in any manner.

Bitcoin in comparison to Blockchain

In 1991, two academics named Stuart Haber and W. Scott Stornetta devised the initial blueprints for the technology that would become known as blockchain. Their goal was to create a system in which the time stamps on documents could not be altered in any way. But the first practical use of blockchain technology didn’t come about until over two decades later, in January 2009, when Bitcoin was introduced to the public for the first time. 1

A blockchain is the underlying infrastructure of the Bitcoin protocol. Satoshi Nakamoto, the pseudonymous developer of the digital currency Bitcoin, described it as “a new electronic cash system that is totally peer-to-peer, with no trusted third party” in a research paper that was published to introduce the cryptocurrency. 2

The most important thing to realise about this is that blockchain is only utilised by Bitcoin as a way to record a ledger of payments in an open and verifiable manner. However, in principle, blockchain may be used to store any amount of data points in an unchangeable manner. As was just said, this may take the shape of financial transactions, votes cast in an election, product inventories, state identifications, title deeds to properties, and a great many other things.

As of right now, tens of thousands of projects are looking at using blockchains in a number of ways to serve society in ways other than merely documenting transactions. One example of this would be as a mechanism to vote safely in democratic elections. Because of blockchain’s immutability, it would be far more difficult for fraudulent voting to take place if it were ever attempted. For instance, a voting system may be designed in such a way that it issues a separate coin or token to each individual resident of a nation. Then, each candidate would be provided with a unique wallet address, and the voters would transfer their token or cryptocurrency to the address of whatever candidate they desire to vote for based on which candidate’s address was shown on the ballot. Both the requirement for human vote counting and the possibility of dishonest parties to manipulate physical ballots would be rendered obsolete as a result of the transparent and traceable nature of blockchain technology.

How Can Blockchains Be Put to Use?

As we already know, blocks on the Bitcoin blockchain are used to hold information about transactions involving money. As of right now, there are over 10,000 additional cryptocurrency systems that are operating on blockchain. But as it turns out, blockchain is not just a dependable mechanism of preserving data about cryptocurrency transactions; it can also store data about other sorts of transactions.

Walmart, Pfizer, AIG, Siemens, and Unilever are just some of the businesses that have already used blockchain technology, but there are many more as well. For instance, IBM has developed the Food Trust blockchain in order to track the path that food items traverse in order to arrive at their destinations. 3

What is the point? Numerous outbreaks of E. coli, salmonella, and listeria have been documented in the food sector, in addition to incidents in which hazardous chemicals were inadvertently introduced to food products. In the past, it has taken many weeks to discover the origin of these epidemics or the illness that is being transmitted via the food that people are consuming. The use of blockchain technology allows companies the opportunity to trace the journey of a food product from its point of origin all the way through each of the stops it makes until it is delivered. In the event that a meal is determined to be tainted, it is possible to track it all the way back through each stop until it is located at its point of origin. In addition to this, these businesses are now in a position to observe everything else that the product may have come into touch with. This makes it possible for the issue to be identified much earlier, which might possibly save lives. This is only one example of how blockchain technology may be put into effect; there are many more ways in which blockchain can be used.

Banking and Finance

There may not be an industry that stands to profit more than banking from the use of blockchain technology into company processes. Financial services are only available during normal business hours, which are typically Monday through Friday. This implies that if you attempt to deposit a check on Friday at six o’clock in the evening, you won’t see the money deposited into your account until Monday morning at the earliest. Even if you make your deposit during business hours, the transaction may still take anywhere from one to three days to verify because of the enormous amount of transactions that banks need to settle. Even if you make your deposit during business hours. On the other hand, the blockchain system is always operational.

When blockchain technology is implemented into banking systems, customers’ financial transactions can be completed in as little as ten minutes, which is the amount of time it takes to add a block to a blockchain. This processing time is unaffected by holidays, the day of the week, or the time of day. Banks now have the ability to trade money across institutions in a way that is both more expedient and more secure thanks to blockchain technology. The settlement and clearing procedure, for example, might take up to three days in the stock trading industry (or more if dealing overseas), which means that the money and shares are frozen during that time period.

Even if the money is just in transit for a few days, the banks nevertheless face the possibility of considerable expenses and hazards as a result of the enormity of the quantities involved.

Currency

Blockchain technology is the foundation upon which cryptocurrencies such as Bitcoin are built. The Federal Reserve determines the value of the United States dollar. The data and money of users are, in a technical sense, subject to the whims of their respective governments and banks thanks to this centralised authority structure. If a customer’s financial institution is breached, the customer’s sensitive information may be exposed. There is a possibility that the value of the client’s currency will be jeopardised if the client’s bank fails or if the customer resides in a nation ruled by an unstable government. In 2008, a number of failing banks were saved in part by the government using money from taxpayers. These are the concerns that first sparked the idea for, and led to the development of, Bitcoin.

Blockchain technology enables decentralised digital currencies like Bitcoin and others to function independently of any one governing body since its activities are distributed over a network of computers. This not only lessens the potential for loss, but it also does away with a significant portion of the processing and transaction costs. Additionally, it has the potential to provide people living in nations whose currencies or financial infrastructures are unstable with a currency that is more stable, has a wider range of applications, and gives them access to a larger network of individuals and institutions with whom they can conduct business on a domestic and international level.

The significance of using bitcoin wallets as savings accounts or as a method of payment is amplified for those who do not possess state identification. Some nations may be ripped apart by conflict, or their governments may not have the necessary infrastructure to offer identity to their citizens. It’s possible that people living in these nations don’t have access to savings or brokerage accounts, and hence no means to put their money somewhere secure.

In the realm of healthcare, healthcare practitioners may use blockchain technology to safely preserve the medical records of their patients. It is possible to write a medical record onto a blockchain after it has been produced and signed. This gives patients the evidence and assurance that the record cannot be modified once it has been recorded into the blockchain. These sensitive medical data might be encrypted and then saved on the blockchain using a private key. This would ensure that the documents are only available to the appropriate parties, therefore protecting patients’ right to confidentiality.

Documentation of Property

If you have ever spent any amount of time at the office of your local recorder, you are aware that the process of documenting property rights is one that is not only time-consuming but also inefficient. Today, a physical deed has to be handed over to a government worker at the local recording office, where it will then be put by hand into the county’s central database as well as the public index. In the event of a dispute about ownership of property, the claims made regarding the property need to be compared with the public index.

This procedure is not only expensive and time-consuming, but it is also prone to human mistake, and every error makes it more difficult to accurately keep track of who owns what property. There is a possibility that blockchain technology may eliminate the requirement to scan papers and search for physical data stored in a regional recording office. The owners of a piece of property may have confidence that their deed will be accurately and permanently documented if it is saved on the blockchain and subjected to verification by the network.

It may be very difficult, if not impossible, to demonstrate legal title of a piece of property in regions or nations that are wracked by conflict or that have a government or financial infrastructure that is severely lacking, and in which there is no recorder’s office. In the event that a community of people living in such a region is able to make use of blockchain technology, it will be possible to create time lines of property ownership that are both visible and clear.

Smart Contracts

A computer code known as a “smart contract” is anything that may be included into a blockchain in order to expedite, verify, or negotiate the terms of a contract agreement. Users must first agree to a predetermined set of parameters before a smart contract can be used. When such requirements are satisfied, the contents of the agreement will be carried out in their entirety automatically.

Take, for instance, the case of a prospective renter who is interested in leasing an apartment via the use of a smart contract. As soon as the renter has paid the security deposit, the landlord has indicated that they would provide the tenant with the door code to the flat. The tenant and the landlord would each send their respective portions of the deal to the smart contract. The smart contract would then hold onto both the door code and the security deposit until the start date of the lease, at which point it would automatically exchange the door code for the security deposit. The smart contract will return the tenant’s security deposit if the landlord does not provide the door code by the due date specified in the lease. The costs and procedures that are generally connected with the employment of a notary, a third-party mediator, or lawyers would be rendered obsolete as a result of this change.

The Chains of Supply

To document the origins of the goods that they have acquired, suppliers may utilise blockchain technology, much as in the example given by IBM Food Trust. Not just the authenticity of the company’s own goods, but also the legitimacy of popular labels like “Organic,” “Local,” and “Fair Trade,” which would be made possible by this development.

According to a recent article published by Forbes, the food sector is progressively embracing the usage of blockchain technology to trace the course and safety of food throughout the whole journey, which begins at the farm and ends with the consumer.

Voting

A contemporary voting system may benefit from the usage of blockchain technology, as was described above. The use of blockchain for voting has the ability to eradicate election fraud and increase voter participation, as was shown in the midterm elections that took place in West Virginia in November of 2018. 5 When implemented in this manner, blockchain would make vote manipulation very difficult to do. In addition, the blockchain protocol would keep the voting process open and transparent, while simultaneously cutting down on the number of people required to run an election and giving authorities with practically immediate results. Recounts wouldn’t be necessary, and there wouldn’t be any need to be concerned about election fraud happening in the first place.

Advantages of Using Blockchains

Accuracy

Transactions on the blockchain network are verified and authorised by a distributed consensus mechanism consisting of hundreds of computers. Because of this, practically all human participation in the verification process is eliminated, which leads to fewer errors caused by humans and more accurate records of the information. Even in the event that one of the computers on the network committed a computational error, the error would only be made to a single copy of the blockchain. In order for that mistake to propagate to the remainder of the blockchain, it would need to be made by at least 51 percent of the computers that are part of the network. Considering how huge and rapidly expanding Bitcoin’s network is, this is almost impossible to achieve. 6

Reduced Expenditures

Typically, customers have to pay a bank or a notary to authenticate a transaction, a clergyman to execute a marriage ceremony, or a notary public to sign a document. Blockchain does away with the necessity for a third party to verify transactions, and with with it, the fees that come along with that. For instance, company owners are required to pay a little charge if they accept payments made through credit card. This is because banks and payment processing businesses are required to conduct the corresponding transactions. Bitcoin, on the other hand, does not have a central authority and has a cap on the amount of fees that may be charged for transactions.

Decentralization

Blockchain technology does not keep any of its data in a single area for easy access. Instead, copies of the blockchain are made and distributed throughout the many computers that make up the network. Every computer that is a part of the network will update its copy of the blockchain to reflect any changes that occur when a new block is added to the chain. The information is dispersed among several nodes in a network rather than being kept in a single database, which makes it harder for malicious actors to alter the blockchain. If a hacker were to get their hands on a copy of the blockchain, they would only be able to access a single copy of the information rather than the whole network.

Efficient Transactions

Settlement of transactions that are conducted via a central authority may take a few days at the very most. For instance, if you make an effort to deposit a check on Friday evening, you could not really see the cash deposited into your account until Monday morning. Blockchain is operational 24 hours a day, seven days a week, and 365 days a year, in contrast to the business hours that are observed by financial institutions, which are often limited to five days a week. It is possible to finish a transaction in as little as ten minutes, and after just a few hours, the transaction may be regarded as safe. This is especially helpful for international deals, which often take substantially longer due to complications with different time zones and the fact that all parties must confirm payment processing. This may be avoided by using this method.

Private Transactions

The majority of blockchain networks function as public databases, which means that anybody with access to the Internet may read a list of the network’s past transactions. Users are able to obtain information on transactions, but they are unable to access information that would allow them to identify the users who are doing those transactions. The misconception that blockchain networks like Bitcoin are anonymous when, in reality, they are just confidential is rather widespread. One example of this is bitcoin.

When a user conducts a transaction that is visible to other users, the blockchain is updated to include the user’s one-of-a-kind code, which is known as a public key. Their private information is not being shared. Even though a transaction is associated to a person’s name, it does not expose any personal information about that person. However, if a person has made a Bitcoin purchase on an exchange that needs verification, then that person’s identity is still linked to their blockchain address.

Secure Transactions

After a transaction has been recorded, the legitimacy of the transaction must be checked by the network using blockchain technology. Thousands of computers connected to the blockchain work quickly to verify that the transaction data have been entered correctly. Following the completion of the computer’s verification process, the transaction is included in the next block of the blockchain. Every block on the blockchain has its own one-of-a-kind hash, in addition to storing the one-of-a-kind hash of the block that came before it. The hash code of a block will be updated if any of the information on that block is changed in any manner; however, the hash code of the block that comes after it will not be updated. As a result of this difference, it is incredibly difficult to update information on the blockchain without bringing it to anyone’s attention.

Transparency

The majority of blockchains use open-source software in its entirety. This indicates that its source code may be seen by anybody and everyone. Auditors now have the capacity to examine the safety of cryptocurrencies like Bitcoin thanks to this development. Because of this, there is no genuine authority in charge of deciding who owns Bitcoin’s code or how it is modified. Because of this, anybody may make recommendations for modifications or enhancements to the system. Bitcoin might be upgraded if the majority of its users on the network are in agreement that the newest version of the software, which includes the upgrade, is reliable and beneficial.

Serving Those Without Bank Accounts

The fact that anybody, regardless of their race, gender, or cultural heritage, is able to make use of blockchain technology and Bitcoin is perhaps the most significant aspect of these two innovations. The World Bank estimates that over 1.7 billion adult people do not have access to any kind of financial storage for their money or wealth, including bank accounts. 7 The vast majority of these people are residents of developing nations, which have economies that are still in their formative stages and are wholly reliant on cash transactions.

These individuals often receive a little income, which is typically given to them in the form of cold hard cash. They are then required to conceal this actual cash in various spots inside their houses or other places in which they reside, making them vulnerable to robbery or other forms of unwarranted violence. The private keys of a bitcoin wallet may be saved on a piece of paper, a low-cost mobile phone, or, if required, they can even be committed to memory. It is quite probable that these solutions can be concealed more simply than a little amount of cash stashed beneath a mattress for the majority of individuals.

The blockchains of the future are looking into ways to not only operate as a unit of account for the storage of wealth, but also to store medical data, property rights, and a wide range of other legal contracts. This is part of the effort to broaden the scope of blockchain applications.

Disadvantages of Blockchain Technology

Cost

Although users of the technology might potentially save money on transaction fees, the technology itself is not without cost. For instance, the Proof-of-Work (PoW) method, which is used by the Bitcoin network to verify transactions, requires a considerable amount of processing power. In the actual world, the amount of electricity used by the millions of computers that make up the bitcoin network is comparable to what is used yearly in Norway and Ukraine. 8

Users continue to run up their power bills in order to confirm transactions on the blockchain, despite the fact that mining bitcoin is an expensive endeavour. This is due to the fact that miners are paid with a sufficient amount of bitcoin every time they add a block to the blockchain of bitcoin. This ensures that their time and effort are not wasted. However, when it comes to blockchains that do not employ cryptocurrencies, miners will need to be paid or otherwise encouraged to verify transactions in order for the blockchain to function.

There are starting to be some answers to these problems that may be found. For instance, mining farms for bitcoin have been established that use solar electricity, surplus natural gas from fracking sites, or power from wind farms as their primary source of energy.

Inefficiency in both Speed and Data Processing

The cryptocurrency Bitcoin serves as an excellent example of the potential inefficiencies of blockchain technology. The Proof of Work (PoW) algorithm used by Bitcoin adds a new block to the network about every ten minutes. It is believed that the blockchain network can only handle around seven transactions per second at that pace (TPS). Despite the fact that other cryptocurrencies like Ethereum perform better than bitcoin, these cryptocurrencies are still constrained by blockchain. For perspective, the legacy brand Visa is capable of processing 65,000 TPS.

For many years, people have been working on finding answers to this problem. At this time, there are blockchains that advertise transaction processing speeds of more over 30,000 TPS.

The second problem is that each block can only store a certain amount of data. The dispute over the optimal size of blockchain blocks has been, and will continue to be, one of the most significant challenges regarding the future scalability of blockchains.

Illegal Activity

The fact that users on the blockchain network are protected from hackers and their anonymity is preserved by the network’s secrecy also makes it possible for unlawful trade and activity on the blockchain network. Silk Road, a marketplace on the dark web for the sale of illegal drugs and for the laundering of money, was arguably the most often cited example of blockchain being used for criminal activities. Silk Road was live from February 2011 until October 2013, when it was shut down by the FBI.

By using the Tor Browser and making illicit transactions using Bitcoin or one of the many other cryptocurrencies available, users of the dark web are able to buy and sell unlawful things without fear of being discovered. Current regulations in the United States require providers of financial services to obtain information about their customers when those customers open an account, verify the identity of each customer, and confirm that customers do not appear on any list of known or suspected terrorist organisations. In addition, these regulations require providers to confirm that customers do not appear on any list of known or suspected terrorist organisations. This method has advantages as well as disadvantages, depending on how you look at it. It grants access to bank accounts to everyone, but it also makes it simpler for criminals to carry out their transactions. Many people have argued that the positive applications of cryptocurrency, such as bringing banking to parts of the world that do not have access to it, outweigh its negative applications. This is especially true considering that the majority of illegal activity is still carried out with untraceable cash.

Even though such activities were first conducted using Bitcoin, they have now shifted to other cryptocurrencies like Monero and Dash due to Bitcoin’s open source nature and its maturation as a kind of financial asset because of these characteristics.

At this time, only a very tiny percentage of all Bitcoin transactions are associated with any kind of illicit activity.

Regulation

Concerns regarding the impact of government regulation on cryptocurrency markets have been voiced by a significant number of industry participants. As Bitcoin’s decentralised network continues to expand, it is becoming more difficult and close to impossible to put a stop to something like Bitcoin. However, governments might, in theory, make it illegal to hold cryptocurrencies or participate in the networks that support them.

This worry has been alleviated somewhat over time as major corporations like PayPal have begun to permit the ownership of and transaction with cryptocurrencies on their own platforms.

What exactly is a platform built on a blockchain?

Users and developers are able to establish innovative applications of an existing blockchain infrastructure thanks to the availability of a blockchain platform. One such instance is Ethereum, which operates its own own cryptocurrency under the name ether (ETH). 16 However, the Ethereum blockchain also makes it possible to create programmable tokens and smart contracts, both of which are used in initial coin offerings (ICOs), as well as non-fungible tokens (NFTs). All of them are secured by nodes that are part of the Ethereum network and are constructed on top of Ethereum’s underlying technology.

How Many Distributed Ledgers Are There?

The number of active blockchains continues to increase at a rate that is accelerating at an ever-increasing rate each day. As of the year 2022, there are over 10,000 active cryptocurrencies that are built on blockchain, in addition to several hundred additional blockchains that are not associated with cryptocurrencies. 17

What are the Key Distinctions Between a Public and a Private Blockchain?

A public blockchain is a blockchain that allows anybody to freely join the network and set up a node. This kind of blockchain is also known as an open blockchain or a permissionless blockchain. These blockchains need to be safeguarded using encryption and some kind of consensus method, such proof of work, because of the open nature of the blockchain (PoW).

On the other hand, a private blockchain, also known as a permissioned blockchain, requires that every node be authorised before joining. Because nodes are assumed to be trustworthy, the levels of security do not need as much vigilance as they would otherwise.

Who was the first to create a blockchain?

In 1991, two mathematicians named Stuart Haber and W. Scott Stornetta came up with the concept that would later become known as blockchain technology. They sought to create a system in which the time stamps on documents could not be altered in any way.

1 Nick Szabo, a cypherpunk, advocated using a blockchain as a means of securing a digital payments system in the late 1990s. This concept was called bit gold (which was never implemented). 18

What Does the Future Hold for Blockchain?

Blockchain is finally becoming a household name thanks, in no little part, to bitcoin and other cryptocurrencies. This is due in no small part to the numerous practical uses for the technology that have already been developed and investigated. Blockchain is quickly becoming a buzzword among investors around the country because of its potential to make corporate and government processes more precise, efficient, secure, and cost-effective while also reducing the number of intermediaries.

It is no longer a matter of if legacy organisations will catch on to the technology of blockchain as we prepare to enter into the third decade of blockchain; rather, it is a question of when they will do so. NFTs are becoming more commonplace in today’s market, and assets are increasingly being represented by tokens. The next decades will turn out to be a crucial time for the development of blockchain technology.