Blockchain is a database which is shared publicly across the network of nodes, which means the information or records on the database is accessible to all the people in the network.
Here let me take an example with reference to bit coins, cyrpto currencies, which is a new kind of money, the underlying technology of bitcoins is block chain.
How do we buy something online or pay someone online?
We either pay via credit card or netbanking or paypal, paytm, very recently with Tez. Is there any flaw we find with these payment systems? We are highly dependent of centralized banks. All transfers or purchases happen via banks. Banks being centralized, all the payment transactions data remain with banks. They have full control of these transactions data. It means there is a high risk of data being manipulated or data being hacked/lost or sometimes banks shutting down leaving no answers to the customers. Oh no, how can I forget about the extra transaction processing fee!
Imagine a system of payment where we need not depend upon banks, there comes the savior bitcoins. Every transaction is recorded in a database. Every person in the network has copy of this database. When a transaction happens on this system, it is appended to the database on every person’s copy. Any transaction is trying to be modified, rest of the nodes will not accept the change and hence that editing of transaction will never happen.
This shared database or the system is blockchain and the records are blocks. The block chain is an ordered list of blocks. Each block is time stamped with set of transactions happened in last ten minutes on the network and has reference to previous block. Each block is highly secured using encryption.
Having said that, I can think of applying blockchain in places where people place their trust on single entity and huge data lying on their servers and there is a high risk of data being manipulated or where there are many parties involved for a single transaction to happen between Point A and Point B as there is a high possibility of information hiding/missing which could result in paying more amount than actual cost.
Next best example I can recall of applying blockchain to real estates industry. Buying and selling of land/property which include many middle man and there is high chances of information being modified before it reaches the buyer from seller for personal’s benefits.
That’s it for now. Stay tuned, I will explain in detail how a transaction happens on blockchain network on upcoming post in simplified version.
Feel free to leave your comments!