Blockchain is a term widely known in the IT community, but not everyone fully grasps its intricacies. Often, people associate blockchain with Bitcoin, assuming they are one and the same. However, blockchain extends beyond just being a platform for cryptocurrencies.
Here’s what you need to know:
- Imagine a digital ledger that records transactions in a decentralized way. This ledger is called a blockchain.
- Once a transaction is added to the blockchain, it becomes immutable — meaning it cannot be altered or deleted.
- Unlike traditional databases, where a central authority controls the data, blockchain relies on a network of computers (nodes) to maintain and validate the records.
- Ledger: Think of it as a digital bookkeeping system that keeps track of transactions.
- Distributed Ledger: This expands the ledger concept by distributing copies of the ledger across multiple nodes, enhancing security and transparency.
- Blockchain Technology: It’s the underlying framework that powers this decentralized system.
At the end of this article, you will be able to:
- Recall real-world examples of blockchain technology in use.
- Understand the significance of terms like ledger, distributed ledger, and blockchain. 🌐🔗
Bitcoin and Blockchain:
- Bitcoin, the well-known cryptocurrency, is often the first encounter people have with blockchain technology.
- You might not have realized it, but Bitcoin operates on a blockchain foundation.
- The primary purpose of Bitcoin is to prevent fraud and duplication of funds.
- Blockchain plays a crucial role in this by ensuring that currency cannot be copied or manipulated.
Real-World Example Beyond Bitcoin:
- Major global shipping companies are now adopting blockchain to enhance their operations.
How does it work?
- Tracking Shipments: Blockchain allows shippers to closely monitor shipments.
- Immutable Records: Every interaction with the shipment is recorded and cannot be altered.
- Full History: The blockchain maintains a complete history of the shipped item, from its entry into the system until delivery.
A ledger is like a financial diary where banks, businesses, and others record money they’ve paid and received.It’s been around for over 5,000 years, with ancient Mesopotamians using clay tablets to track transactions.
- While the core purpose remains the same, modern ledgers have evolved. Instead of physical books, they’re often digital applications backed by databases.
- A client application connects to the main database. It reads current data and sends updates. But beware, direct access to the source file can lead to tampering or data loss without users even realizing it.
Imagine a traditional ledger, like an old-fashioned book where transactions are recorded. Now, let’s make it more robust by creating a distributed ledger.
Here’s how it works:
- Instead of a single master copy of data, the distributed ledger shares the entire dataset across multiple network participants (members).
- Each member holds a complete copy of this data.
- No Single Vulnerable Point: Since there’s no central master file, no single point can corrupt it.
- Redundancy: Even if one participant goes offline, others still maintain all the data.
- Updates with Consensus: When someone wants to modify data, all participants must agree — making hacking extremely difficult.
- Imagine a distributed ledger that adds an important feature: immutability.
- Immutability means once something is written, it can’t be edited or removed.
- With blockchain, data becomes unchangeable — like carving it in stone.
- The entire history of data is preserved from the beginning of the blockchain.
How It Works:
- Picture a chain of transactions, each contained in a block.
- When information changes, instead of overwriting it, blockchain adds a new block.
- This way, the old data remains intact, and we always know what it used to be.
In summary, blockchain ensures security, transparency, and a rock-solid record of data.
Milan Dhore, M.S (Data Analytics)
Cloud Strategic Leader | Enterprise Transformation Leader | AI |ML
Certified in TOGAF, AWS, ML, AI, Architecture, Snowflake, Six Sigma, NCFM, Excellence Award in Advance Data Analytics, Financial Market …. Know More- www.milanoutlook.com