Blockchain Basics

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Yes, to today’s we are going to learn about blockchain technology.

When I first heard the word ‘blockchain’, what crossed my mind is a literal chain made of different blocks. Not wrong, but it’s just more than a connected chain.

Think of a group of people who keeps a shared record, be it notes or daily updates or money details etc, completely secure & up-to-date, without having a faculty or your boss interrupting like a central authority to manage. Sounds fascinating? and difficult too right?

Blockchain exactly does this. It is a decentralized and distributed digital ledger technology (Ledger — system for recording and managing transactions or data in a secure and organized manner). It allows multiple parties to maintain a shared, secured database that multiple parties can access, without relying on a central authority. At its core, a blockchain consists of a chain of blocks, where each block contains a list of transactions. These transactions are bundled together and added to the blockchain in a sequential and chronological order. Once a block is added to the chain, it is very difficult to alter or remove the data contained within it, making the blockchain an immutable and tamper-resistant record of transactions.

What is centralized and distributed ledger?

This might look like too many tables, but I consider a single table at a time. This table system is very appropriate and effective for remembering and understanding things better. If this is the same case for you or if you have any suggestions, then let me know.

Why decentralized ledger is taken in count instead of centralized?

1. Security: No single point of failure
2. Transparency: Transactions are publicly recorded & visible
3. Resilience: If one node fails, others continue to operate without interruptions.
4. Control & Autonomy: Users have control over their data & transactions, without needing permission from a central authority.
5. Trust: Trust is distributed across many participants, reducing dependency on a single entity. (I know it’s difficult for the people having trust issues).
6. Cost Efficiency: No intermediaries needed, reducing transaction costs.

Types of blockchain

1. Public Blockchains: These types are open to everyone and are permissionless. Anyone can join the network, validate transactions, and contribute to the process. Examples include Bitcoin and Ethereum. They are secure, transparent, and resistant to censorship.
2. Private Blockchains (permissioned): These are restricted to a specific group of participants. A central authority controls who can join the network and who can’t. They are typically used by organizations or consortia for internal purposes and offer higher scalability and privacy compared to public blockchains.
3. Consortium Blockchains: Governed by a group of organizations, sharing the responsibility. They offer a balance between decentralization and security. Like a group project in college, it is controlled by a select group of organizations working together.
4. Hybrid Blockchains: Controlled by a single organization, but with some public oversight for validation. Think of a company might use a hybrid blockchain to manage its supply chain, keeping sensitive data private while ensuring transparency with public verification of certain transactions.

Features of Blockchain

1. Decentralized Nature: Instead of relying on a central authority, blockchain operates on a network of nodes, where each node maintains a copy of the entire blockchain. This means no single entity controls the entire network, making it more resilient, transparent, and resistant to censorship.
2. Transparency: All transactions are recorded on a public ledger that everyone on the network can see. This transparency enhances trust, accountability and traceability among participants.
3. Security: Transactions are secured using digital signatures and cryptographic hashing, making it extremely difficult to alter or tamper with the data once it is added to the blockchain.
4. Immutability: Once data is added to the blockchain, it can’t be easily changed or deleted. This immutability feature makes blockchain particularly useful for applications that require a tamper-resistant and auditable record of transactions.
5. Traceability: Each transaction recorded on the blockchain contains a timestamp and a reference to the previous transaction, creating an audit trail. This makes it easy to trace the history of an asset, which is especially useful in supply chains.
6. Efficiency & cost reduction: Blockchain has the potential to streamline and automate processes by removing the need for intermediaries and reducing paperwork. This increased efficiency can result in cost reductions and faster transaction processing times.
7. Smart contracts: Blockchain technology can support the execution of smart contracts, which are self-executing contracts with predefined rules and conditions.

Applications of blockchain in cybersecurity or in normal

1. Secure Voting Systems: Blockchain can create transparent and tamper-proof voting systems, ensuring the integrity of election results and protecting against voter fraud.
2. Cyber Threat Intelligence: Cyber threat intelligence can be facilitated among organizations while preserving the anonymity and confidentiality of the contributors, thereby enhancing collective security efforts.
3. Immutable Audit Trails: Blockchain provides immutable audit trails for regulatory compliance and auditing purposes, ensuring transparency and accountability in financial transactions and data management.
4. Decentralized File Storage: Blockchain is used for decentralized storage solutions, which allows users to store files securely across a distributed network of nodes. This reduces the risk of data breaches and unauthorized access.
5. IoT Device Security: Security of IoT devices can be increased by providing decentralized identity management and authentication mechanisms, protecting against unauthorized access and tampering.
6. Securing Intellectual Property: creators can timestamp and securely store intellectual property rights and ownership information. It provides a tamper-proof record of creation that can be used in legal disputes.
7. Smart Contract Security: Smart contracts based on Blockchain can automate and secure contractual agreements in various industries such as insurance, real estate, and finance, reducing the risk of disputes and fraud.

So, this was the basic overview of what exactly blockchain is. I hope the idea is clear, in upcoming blogs, we will learn more. See you next Thursday!! Keep Supporting!!