What is Blockchain?
A blockchain in simple terms is a time-stamped series of immutable records of data that is not owned by a single entity rather managed by a cluster of computers.
Every block of this data is secured and using cryptographic principles they are bound to each other.
On a distributed network of nodes, blockchain data is stored in thousands of devices. Malicious attacks and technical failures may occur in the system and data. Each network node can store a copy of the database by replication. Due to this failure does not occur at single point.
Once the data has been registered in the blockchain, it is very difficult to remove or change it. Because of this it is a great technology to store financial records. Every change is tracked and recorded in this network.
3. Trustless System
In traditional payment systems, transactions depend on an intermediary like bank, credit card company, etc. This is not necessary in the blockchain technology because the transactions are verified by the distributed network of nodes by a process called mining. Therefore, it is referred as a ‘trustless’ system.
1. Closing Thoughts
Blockchain technology is going to stay because of its unique advantages. To find its value, business and government will be experimenting in the next few years with new applications.
2. Data Modification
One of the disadvantage of blockchain technology is that it is difficult to modify the data once it has been added to blockchain. Blockchain’s advantage of stability is not always good. Changing blockchain code or data is in demand which is a very hard task.
The blockchains which uses Proof of Work are inefficient. Mining is very competitive and in every ten minutes there is just one winner while the other miners work is wasted. To increase the computational power, miners continuously try because of which they have a greater chance of finding a valid book clash.
4. Private Keys
To give users ownership, public-key cryptography is used by Blockchain. A private key is provided for each blockchain address. The private key should be kept secret while the address can be shared. To access their funds, users need their private key.
Due to growth in blockchain ledgers with time around 200 GB of storage will be required by Bitcoin blockchain. Network has risk of losing nodes if it becomes too large to download and store.
6. 51% Attacks
To protect the Bitcoin blockchain, the Proof of Work consensus algorithm has proved to be very efficient. 51% attack occurs when more than 50% of the network hashing power is controlled by one entity. They may also disrupt the network by modifying or excluding the transaction.