BlockChain

A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Due to its design, a blockchain is resistant to modification of its data; the reason for it is because once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks.

Blockchain has been in a lot of discussions these days, mainly because it is the backbone of the very famous cryptocurrency in the world - the Bitcoin. Many Governments and leading Banks have decided to bring many of their conventional transactions based on the Blockchain concept. The applications and potential of this framework are huge and are considered to be changing the way transactions are made in various domains.

The technology is now being adapted into many verticals like Healthcare, Medicines, Insurance, Smart Properties, Automobiles, and even Governments.

However, so far the most successful implementation of Blockchain is the Bitcoin - A Peer-to-Peer Electronic Cash System, which incidentally is also the first implementation of blockchain technology.

Now to understand blockchain technology, let's try to understand how the Bitcoin System is designed and implemented.

 

As we all know, the banks maintain a ledger that records each and every transaction. This ledger is held securely and maintained by the bank. Satoshi Nakamoto, proposed that let the ledger be made public and it should be maintained by the community.

Once we think of making such ledger public, several other issues and complications come to mind, the ledger has to be tamper-proof so that nobody can modify its entries, as each entry in the ledger is visible to all, and we will have to figure out how to maintain the anonymity - obviously, you would not like everybody in the world to know that I paid one million dollars.

Also, as there is only one single ledger keeping track of each and every transaction in the world, the size of the ledger would be another great concern. Providing solutions to all such concerns is blockchain.

Structure of Block Chain-

A blockchain is a decentralized, distributed, and at times public, digital ledger consisting of records called blocks which are used to record transactions across many computers so that the records or blocks cannot be altered independently, without the alteration of all subsequent blocks.  A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. They are authenticated by mass collaboration powered by collective self-interests. Such a design facilitates a robust workflow where participant’s uncertainty regarding data security is marginal. The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset. It confirms that each unit of value was transferred only once, solving the long-standing problem of double-spending. A blockchain has been described as a value-exchange protocol. A blockchain can maintain title rights because, when properly set up to detail the exchange agreement, it provides a record that compels offer and acceptance.

 

Blockchain is made up of three main components-

Block- A block holds batches of valid transactions over a period of time. The size, period, and triggering event for blocks is different for every blockchain. Each block includes the cryptographic hash of the prior block in the blockchain, which links the block. The linked blocks form a chain, and this repetitive process confirms the integrity of the previous block, starting from the first block.

Chain-A hash that links one block to another, in other words holding them or chaining the blocks with each other. It also holds the blockchains together and allows them to create trust. The hash in the blockchain is created from the data that was in the previous block. The hash is a fingerprint of this data and locks blocks in order and time.

 Network-The network is composed of “full nodes.” Think of them as the computer running an algorithm that is securing the network. Each node contains a complete record of all the transactions that were ever recorded in that blockchain. The nodes are located all over the world and can be operated by anyone. It’s difficult, expensive, and time-consuming to operate a full node, so people don’t do it for free. 

 Uses of Blockchain-

Blockchain technology can be integrated into multiple areas. The primary use of blockchains today is as a distributed ledger for cryptocurrencies, mainly bitcoin.

Cryptocurrencies-Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin, network, and Ethereum network are both based on blockchain.

Smart contracts- Blockchain-based smart contracts are proposed contracts that can be partially or fully executed or enforced without human interaction. One of the main objectives of a smart contract is automated escrow. A key feature of smart contracts is that they do not need a trusted third party (such as a trustee) to act as an intermediary between contracting entities; The blockchain network executes the contract on its own. This may reduce friction between entities when transferring value, and open the door to a higher level of transaction automation.

Financial services- Banks are interested in this technology because it has the potential to speed up back-office settlement systems. Banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.

Video games- A blockchain game CryptoKitties, launched in November 2017. The game made headlines in December 2017 when a crypto kitty character - an in-game virtual pet- was sold for more than US$100,000

Energy trading- Blockchain is also being used in peer-to-peer energy trading.

Supply chain

There are a number of efforts and industry organizations working to employ blockchains in supply chain management.

Mining- Blockchain technology allows wholesalers, retailers, and customers to track the origins of gems stones, and other precious commodities. In 2016, The Wall Street Journal reported that the blockchain technology company, Everledger was partnering with IBM’s blockchain-based tracking service to trace the origin of diamonds to ensure that they were ethically mined. DTC, the Diamond Trading Company has been involved in building a diamond trading supply chain product called Tracr.

Food supply- Blockchain technology is being used to allow retailers and consumers to track the provenance of meat and other food products from their origins to stores and restaurants. Walmart and IBM are running a trial to use a blockchain-backed system for supply chain monitoring for lettuce and spinach — all nodes of the blockchain are administered by Walmart and are located on the IBM cloud. One of the cited benefits is that the system will enable rapid tracing of contaminated produce. 

Shipping-  Walmart Canada uses a blockchain-based system developed by DLT Labs, a blockchain SaaS provider, that allows the retailer to track shipments and deliveries handled by dozens of third-party trucking companies. One reported benefit is that the blockchain-based system enables automated invoicing that reduces disputed billing, which in turn reduces delays in Walmart paying the freight transport companies.

Health Care- In response to the 2020 COVID-19 pandemic The Wall Street Journal reported that Ernst & Young was working on a blockchain to help employers, governments, airlines, and others keep track of people who have had antibody tests and could be immune to the virus. Hospitals and vendors also utilized a blockchain for needed medical equipment. Additionally, blockchain technology was being used in China to speed up the time it takes for health insurance payments to be paid to health-care providers and patients.

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