Blockchain fundamentals

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Blockchain is a data structure that can be read as a ledger of transactions or blocks. Each block contains encoded information and data about the transaction, including when it happened, how much money was involved, and with which other accounts it happened. The chain part means that all these blocks are linked together in one unbroken chain.

Each combination of blocks is called a ledger of transactions that no individual can tamper with because it’s stored on computers around the world that see and record every change — or block. Because transactions are validated by the entire network instead of just one central authority (like banks or government institutions), users cannot lie about who they are, what they own, or what they’ve purchased. Transactions are also much faster to complete than a bank transfer, taking just seconds instead of days.

Blockchain technology has been around for some time now but is only recently being recognized as revolutionary technology with great potential to change many industries including supply chain management, financial services and even healthcare. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.


Demystifying this technology

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A simple analogy for how blockchain technology operates can be compared to how a Google Docs document works. When you create a Google Doc and share it with a group of people, the document becomes accessible to that specific group. Similarly, all the modifications are also recorded and are viewable to all parties. This creates a decentralized distribution chain that gives everyone access to the base document at the same time. The biggest difference between blockchain and Google Doc is that the former cannot be modified when written, adding to its level of security.

Blockchain is a combination of three leading technologies: cryptographic keys ( private keys and public keys), a peer-to-peer network containing a shared ledger, and a means of computing, to store the transactions and records of the network.

Every chain consists of multiple blocks and each block has three basic elements: the data in the block, the nonce, and the hash. The nonce in blockchain is a 32-bit whole number that’s randomly generated when a block is created, which then generates a block header hash. A hash in blockchain is a 256-bit number permanently attached to the nonce.

When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined.


Endless potentials

Operations in most industries often waste effort on duplicate record keeping and third-party validations. Record-keeping systems can be vulnerable to fraud and cyberattacks. Limited transparency can slow data verification. Therefore, blockchain has been extensively explored and applied in multiple industries to combat the limitation of centralized systems.

One of the industries that first witnessed the prominent impacts of blockchain is the financial industry. As they are extremely centralized and heavily reliant on intermediaries like banks and credit card companies, the process of managing money and assets can be slow, expensive, and more susceptible to error and fraud. Due to the decentralized nature of a blockchain system, the chance of a data breach is significantly reduced. In addition, users won’t have to pay a middleman like a credit card company for transaction fees.

Healthcare services are another industry that blockchain technology is disrupting. One of the biggest issues in healthcare is managing patient data. Having multiple databases and systems that keep track of patient records makes it difficult to access information at the point of care. To address this problem, blockchain companies are creating decentralized patient databases, which grant access to anyone who is authorized to view them. As this technology becomes more accessible, it will change the way we do business and reshape the world.

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