What Is Blockchain Technology?
To simplify the hype, Blockchain is an online, unalterable, foolproof, record of all the previous, current and future transactions between two parties. It is a decentralized system for business transactions, which means that no 3rd party or authority is involved to ensure honest dealings rather the Blockchain technology is there to help maintain authenticity through its record keeping and transparency!
How Does It Work?
The mechanism relies upon two parts; The Blocks and The Chain.
Blocks refer to the stored data or ledger. The data in it is stored in the form of a ‘Hash’ and works upon the principle of ‘Secure Hashing Algorithm 256′ (SHA-256). Each dialogue and transaction is secured in the form of a Hash and can be accessed by everyone on the internet but is unalterable.
As displayed in the image, change as minute as the initial alphabet being capital affects the Hash highly thus ensures a unique Hash for each and every transaction.
The second part, The chain refers to the connectivity of the blocks with one another and the trail that it follows keeping a record of the history of transactions.
This is how a blockchain database looks like. It includes the basic information of both the parties, the amount and nature of the transaction and the time at which the transaction was made.
What Is The Significance Of Blockchain Technology?
Blockchain technology is to open a new era in the field of online transactions and business.
Let us take help of an example to simplify the process. Usually, the use of Blockchain comes in when the transactions are related to any sort of Cryptocurrency i.e: Bitcoin. But as cryptocurrencies are banned in Pakistan by The State Bank Of Pakistan since 8th April 2018. Thus, we will take a regular online transaction.
Let’s take ‘Daraz.pk’ for instance. Daraz is an app for online sale purchase of a variety of stuff. What it actually does is that it deals with vendors who are willing to sell their products online. And then it provides them with a medium to interact with the buyers. And once the purchase is made. The authorities at Daraz check in with the details you have provided, in this way they ensure a successful and foolproof transaction between the buyer and the seller.
1. Enables Peer-to-Peer Network:
Blockchain Technology tends to cut down this middle man! And become one itself. Only that it is no man but a bunch of computers doing this task for them. This is known as a ‘peer-to-peer network’. Where no 3rd party is involved. The buyer purchases directly from the seller and their transactions are securely kept by computers working upon the principle of Blockchain Technology.
2. Ensures Trusted Transactions:
As the transactions are pursued by machines there is no doubt of any corruption. Moreover, blockchain ensures that none of the parties goes against the contract as the ledger is open and unalterable. Thus, once a transaction has been made it is considered to be the final verdict and no one can go against it which makes it fraud-proof aswell. Imagine a business environment with 100% trust assurance.
3. Cuts Down Transactional Fees:
As there are no 3rd parties left this means that both the dealing parties enjoy all the profit by themselves and need not share it with the middle man.
It is almost impossible to alter the data of a block due to the complexity of the Hash. But if for instance someone breaks into one block and alters the transactional data. They will then have to change the entire record of all the pre-existing blocks because of each block being connected to one another and containing the transactional history. Which is humanly impossible. This makes blockchain technology hack proof.
As it is an Open database; everyone on the internet has access to the ledger of all the transactions being made. Which means that nothing is hidden from anyone. We may check on to companies providing the quality goods they claim to offer, can predict the market trend for fruitful investments, government officials may be checked for corruption etc.
6. Smart Contracts:
The blockchain base smart contracts allow proposed partial or fully delivered contracts without any human assistance. Although this has not been implemented as yet but is viewed as one of the visions about the blockchain technology.