When we think about a financial transaction what first thing comes into your mind? Bank, financial institution? Correct!
Till now whenever there is a financial transaction people rely on intermediaries like banks, financial institutions. But ever you thought why? It’s because we trust these institutions. We know if a bank is involved in a transaction our money is safe. Atleast this the comfort we have.
These middlemen in the transaction authenticate these transactions and make a record of same and this is the record gives us trust. So, essence here is record which is being done by banks etc. What if these records move out of the transaction? Difficult to digest.
In few moments we will discuss about the revolutionary technology which will take away record from these intermediaries but first we need to understand why Blockchain comes into existence?
Blockchain and Bitcoin are related.
In 2008, a concept given to world by Satoshi Nakamoto, which talk about a peer to peer electronic cash system where transactions are happening between two parties without an intermediary like banks. And this innovative technology is begin termed as Bitcoin. This innovative technology is appreciated everywhere but the back end system which tracks all the transactions of this Bitcoin revolution is known as Blockchain. However, Blockchain is not only limited to Bitcoin. Blockchain technology has several hundred other uses. The other recent well known use of Blockchain technology is Ethereum Public Blockchain which is used to execute one to one contracts.
What is Blockchain?
So, finally Blockchain is nothing but a digital ledger distributed across to keep record of digital transactions. So, in these database the control is diversified and data is open to all using this platform in comparison to existing administrator like banks who controls the central ledger. In Blockchain network just like internet one can give access to anyone and configure it appropriately to restrict it to defined users. So, in that way it is as secure as traditional control by bank and as flexible to accommodate multi transactions.
Under Blockchain, a digital transaction occurred send to a batch of transactions and records in chronological manner in the ledger. This batch is protected with high security code and send to the network in the interval of 10 minutes to validate. Miners (member of blockchain network) then compete with each other to validate the transaction batch provided by network. The first miner who validates the batch provided fastest will receive the reward. The reward could be Bitcoin.
Once, the transaction is validated through above process same is recorded in the ledger in linear chronological manner along with timestamp. If there is a history of block provided same is linked to previous block record hence giving a complete chain of the transaction.
So, everyone in the Blockchain knows who own which transaction. This openness brings trust among others and transparency to authenticate it any time. This complex nature of linking all transactions not only creates transparency but make the transactions more secure. Think of a situation a hack wants to enter into particular block. In that case he not only has to hack one block but all subsequent trail block which virtually now settled into millions of millions connected chain making it impossible to dig further. Hacker need to do this for every Blockchain ledger to get access to main transaction.
Blockchain is future of technology, future of internet of things. It will definitely change the way we currently see the things. The industries currently relying on database and central repositories like banking, real estate, insurance, health, legal are going be benefitted with this technology.
Bitcoin is just the beginning. Many more benefits of Blockchain to follow.
Views welcome.