What Is Blockchain Technology And How Does It Work

Common misconceptions about blockchain - TyN Magazine

Blockchain technology is a system of recording information in a way that makes it difficult to change or hack the system. It is the concept behind the running of the blockchain. Blockchain makes cryptocurrencies (digital currencies secured by cryptography) like Bitcoin work just like the internet makes email possible.

What Is Blockchain Technology And How Does It Work

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.

The blockchain is a fixed distributed digital ledger with many use cases beyond cryptocurrencies.

A simple analogy for understanding blockchain technology is a Google Doc.

When we create a document and share it with a group of people, the document is distributed instead of being copied. This creates a decentralized distribution chain that gives everyone access to the document at the same time. No one is locked out awaiting changes from another party, while all modifications to the doc are being recorded in real-time, making changes completely transparent.

There are four main types of blockchain networks

there are four different types of blockchain technologies.

  •   Public
  •   Private
  •   Hybrid
  •   Federated/ Consortium Blockchains

While we try to understand Blockchain better, it is very important to understand how its two major network types work and what advantages do they bring to our business. Each type has its own set of benefits which is why it is important to analyze them and use the best one for our business.

Public blockchain

A public blockchain network is a blockchain network where anyone can join whenever they want. There are no restrictions when it comes to participation. More so, anyone can take part in the consensus process. For  Example Bitcoin, Ethereum, Litecoin

 Ethereum is one of the public blockchain platform examples

Public blockchains allow all users to take part in the network: this compromises their efficiency and speed. On the other hand, a private blockchain uses as many resources as required and thus is faster and more efficient

Private Blockchain

Private Blockchain gives a little bit of authority to the one that controls the network. Only certain individuals can be a part of it who qualify a set of terms and conditions and it’s the company that controls who can read access to their transactions. This brings a level of privacy in private networks which the public networks lack.

A private blockchain is a special type of blockchain technology where only a single organization has authority over the network. Private blockchain solutions develop these platforms for the internal networking system of a company. Thus your trust is needed in this process.

Who needs a private blockchain network?

 I think it’s best to look at the companies that develop blockchain solutions, and who they are targeting when trying to sell that service. Insolar is a great example. They have a clean site and get straight to the point. The services they offer include building customized blockchains to help businesses streamline (And so save money on) their administration. They also lean heavily on supply chain/logistics. And this is one of the areas where blockchain shines the most.

Hybrid Blockchain

 is one of the different types of blockchain technology. Hybrid blockchain is best defined as a combination of a private and public blockchain. It has use-cases in an organization that neither wants to deploy a private blockchain nor public blockchain and simply wants to deploy both worlds’ best. You can use hybrid networks for real state purposes where real-estate companies can use it to run their systems and use the public to show information to the public.

Dragon chain and Xin Fin’s Hybrid blockchain are two examples.

Consortium blockchain

 The fourth type of blockchain, consortium blockchain, is also known as a combined blockchain. A consortium blockchain is a private blockchain with limited access to a particular group, eliminating the risks that come with just one entity controlling the network on a private blockchain. the advantage of a consortium blockchain tends to be more secure, scalable, and efficient than a public blockchain network. Like private and hybrid blockchain, it also offers access controls.

Which Blockchain Type You Should Choose?

Each blockchain has something unique to offer. That’s why there is not a simple answer to what type of blockchain you should choose.

However, to make sure that you make the right choice, let’s go through each one of them and understand what they have to offer.

Public blockchain network/Bitcoins/cryptocurrency

“The reason why it’s worth money is simply that we, as people, decided it has value—same as gold,”. Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoin is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments.

Bitcoin is built on a distributed digital record called a Blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks that contain information about every transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. Entries are strung together in chronological order, creating a digital chain of blocks

Purpose Of Blockchain

This is P2P technology. Blockchain is the imminent future of our computer networks. It’s a very cost-efficient system, in which everyone is the judge and protector of information, both theirs and someone else’s. Inside of a blockchain, there is no danger that your data will be stolen, changed, or tampered with – simply because everyone is watching and keeping exact records of everything that has ever happened within the system, while the whole process is securely protected with cryptography

Blockchain Is Changing Our World

Here are some examples

It’s quickly becoming apparent that blockchain technology is about far more than just Bitcoin. Across finance, healthcare, media, government, and other sectors, innovative uses are appearing every day.

Dubai Dubai has set sights on becoming the world’s first blockchain-powered state. In 2016 representatives of 30 government departments formed a committee dedicated to investigating opportunities across health records, shipping, business registration, and preventing the spread of conflict diamonds

Med Rec – An MIT project involving blockchain electronic medical records designed to manage authentication, confidentiality, and data sharing.

Kodak – Kodak recently sent its stock soaring after announcing that it is developing a blockchain system for tracking intellectual property rights and payments to photographers.

Guard time – This company is creating “keyless” signature systems using blockchain which is currently used to secure the health records of one million Estonian citizens.

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