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Understanding the Blockchain

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What is a Blockchain?

Blockchain is a distributed database that handles a rigorous list of records, (termed as blocks), safe from tampering.

Blockchain public ledgers record transactions between two parties in a verifiable and permanent manner. Blockchain’s design is secure with distributed computing system obeying fault tolerance. Blockchain records, documents, events, identity management, management activities, medical records, and transaction processing.

The origination of the blockchain made it the primary digital currency far away from the central server. This design later turned as an inspiration for other applications.

Architecture of Blockchain

Image courtesy: William Moungayar

Important design aspects in the architecture of a Blockchain are –

  1. Blockchain platform
  2. Nodes
  3. Network Platform Stack
  4. Transactions

Illustration - Blockchain shared ledger

Blockchain Platform:

The Blockchain runs on distributed servers. The Blockchain data is stored either in a flat file or in a RDB based on the choice of the user.

The Blockchain software operation is so massive that it is impossible to hack into the application. The nodes within the network use peer-to-peer IP network to verify transactions. When numerous nodes have the same blocks within their databases, they are regarded to be in consensus.

Nodes in the Blockchain:

Blockchain network is a peer to peer working on the IP protocol of the internet with a specific server node.

Each node forms a replicated copy of the database along with the information of the owner. The consensus mechanism specifies the blockchain updates. Each node plays a specific role based on its business intention. Every node joins the network accordingly.

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Network Protocol Stack:

Once nodes get booted up, they conduct a peer discovery using a port over TCP. The Blockchain Network Architecture maintains the standard semantics to enable multiple types of blockchains co-exist with management abstraction.

Blockchain Network Architecture

Transactions and Blocks:

Applications use blockchain records to conduct transactions and blocks.
Salient features –

  1. Creation of transactions using a Mobile Wallet or any other app.
  2. Transactions stores business data in the blockchain depending on specific sequences.
  3. Blocks are recorded in a validated sequence.
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Merits of Blockchain technology

1. Eliminating intermediation
The exchange between two parties is made possible without any necessary intermediation from the third party. This process strongly eliminates the risk from outer parties.

2. Authorized users
Users are completely aware of all their data and information regarding transactions.

3. Standard data
Data in Blockchain is intact, stable, apt, precise, and wholly accessible.

4. Reliability
Blockchain does not deal with a central point of failure, as it is built with decentralized networks. Due to this feature, Blockchain is able to withstand malicious attacks.

5. Integration of process
Transactions are well - executed same as the protocol commands. This access removes intermediation of a third party site.

6. Transparency
Alterations to blockchains are available for use by all parties. This results in transparency, and immutability while performing transactions.

7. Simplified Ecosystem
All transactions are added to an autonomous public ledger. This reduces the complications associated with multiple ledgers.

8. Quicker transactions
Interbank transactions takes much time, in fact, days for final settlement, mainly out of working hours. Blockchain transactions lessen this transaction time to just a few minutes.

9. Lesser transaction costs
By eradicating the third party intermediaries, blockchains rise to the potential of greatly reducing the fee regarding the transaction.

Related Page: Read about Theory of Blockchain

Features of Blockchain Technology

Blockchain technology created the backbone of a new type of internet allowing distributed digital information.

· A distributed database
Blockchain database is kept open, public and readily verifiable and accessible. It is difficult for a hacker to corrupt the centralized version of this information.

· Durability and robustness
Blockchain technology possesses the built-in robustness. It stores blocks of identical data across its network, which ensures:

  1. Be controlled by any single entity.
  2. Has no single point of failure.

· Transparent and incorruptible
Blockchain network stays in a state of consensus and automatically checks within itself. The network reconciles each transaction within a span of a ten-minute interval. Two significant features are:

  1. Transparency - data is embedded public within the entire network.
  2. Incorruptible - Huge amount of computing power is utilized to override the network while altering a single unit of data.

· The idea of decentralization
By design, the blockchain is a decentralized technology. Decentralization means the network operates on a user-to-user basis. The forms of mass collaboration this makes possible are just beginning to be investigated.

· The Blockchain & Enhanced security
Blockchain stores the data along its network. This feature reduces the risks associated with the data. Security methods of the Blockchain employ encryption technology, making data incorruptible.

· A second-level network
With blockchain technology, the web gains a new layer of functionality. With the added security brought by the blockchain, new internet business is on track to unbundle the traditional institutions of finance.

Who will use the blockchain?

The blockchain potentially cuts out the middleman for huge type of transactions. Currently, finance offers the strongest use cases for the blockchain technology.

Wallet applications are the most common GUI devised for the blockchain. This methodology is attainable even to the general public with basic knowledge on computing.

Blockchain shows great promise across a wide range of business applications like:

Banking
Finance
Government
Healthcare
Insurance
Legal
Manufacturing
Media and Entertainment
Retail
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Conclusion…

Blockchain mechanism gets everyone to the standard level of accountability. It represents a specific way to transact business. It fairly eliminates the errors and missed transactions. Blockchain guarantees the transaction validity by recording it not only on the main register, but a connected registers, via a secure validation system.

All credit goes to the key concepts of cryptographic security, decentralized consensus, and public ledger, for defining a profound change in organizing economic, political, and scientific activities employing blockchain technologies.


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