Blockchain, Its Benefits And Shortfalls Explained

What is Blockchain?

This technology is a kind of database that is decentralized and distributed like a general ledger. Blockchain transforms digital data into immutable and transparent one, using cryptographic hashing and the enhancement of decentralization.

Blockchain collects information in packages called Blocks and stores a set of these information in them. Whenever the capacity of one of these blocks is full, they are chained to the previous block and form a chain of data, which is called a block-chain.

Database: A collection of information that is stored electronically on a computer system. This information is also categorized into templates and tables, and databases contain a large amount of information.

Blockchain can be a list of transactions, legal data, government, and bank IDs, customer information, and a company’s inventory…

Blocks

Each chain consists of several blocks that have three basic elements:

  • A 32-bit integer is called a nonce
  • The hash is a 256-bit number wedded to the nonce
  • The data in the block

Miners

Miners’ task is to create new blocks on the chain in the mining process. And when the blocks are successfully mined in the mining process, this chain change is confirmed by all nodes and the miner receives a reward.

Nodes

Nodes can be any electronic device that has its own copy of the blockchain. Each node also has a full record of the data. Which is stored in the blockchain from the beginning.

The blockchain network also algorithmically approves each newly extracted block to update the chain. No node in the network can change the information in the network, and here the transparency and decentralization of the blockchain network show itself. A feature that we can see very well in Bitcoin.

Blockchain Security

By adding a block to the chain, it is very difficult to change it (unless in certain circumstances where the majority of the nodes have agreed to do this) and these blocks are always stored linearly and temporally.

Each block also has its own hash and Hash codes, by creating a mathematical function, convert digital information into a string of letters and numbers. Also if this information changes, the hash codes will also change.

Changing the version of the chain will identify that version and set it aside. So security in the blockchain network shows itself well due to its decentralization as well as full transparency. Infiltrating such a network requires a lot of capital and resources in the form of computing capacity and energy.

History of Blockchain

Blockchain has undergone many changes and events throughout its history. These important changes lasted from 2008 to 2020, and we will definitely see more changes and more evolution of this powerful network.

Advantages

  • Transparency: all the parties in a transaction can easily see the details and progress of such transactions. There is complete transparency, so the blockchain is trustworthy to the point that it is referred to as a trustless system. This means that there is no need for extra assurances to depend on the authenticity of processes and outputs of a blockchain transaction.
  • Decentralization: Blockchain systems are not controlled by any individual, government or entity. It is completely decentralized because the nodes that control, run and protect the network originate from different parts of the world. They are operated by entities that are not related who derive benefit from the decentralization. So no one has the ability to make a decentralized system compromised.
  • Improvements in verification
  • Significant reduction in costs: This is mainly as a result of the fact that the technology eliminates third parties and the extra cost of having them in the line of production or service.
  • Transactions are secure, private
  • Extreme security
  • Disadvantages
  • Use in illegal activities

Author: mr_ROBOTT

Author of cryptocurrencies and activities in the field of cryptocurrencies