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    What is Blockchain Technology

    Over the past few years, we have constantly been coming across the term Blockchain. Some of us might even be using it probably regarding cryptocurrencies like Bitcoin. But to understand this new technology one needs to take a deep dive. First, let’s answer what is blockchain? Blockchain Technology is a shared, digital ledger that expedites the method of recording transactions and tracking assets in a business network. 

    It is a system of recording transactions where every transaction is authorized by the digital signature of the owner. The digital signature authenticates every transaction and safeguards it from tampering which means anybody can see the data, but they cannot corrupt it.

    Key elements of a blockchain

    1. Distributed ledger technology – refers to a digital system that records transactions related to assets. It is a protocol that allows simultaneous access, validation, and record updating across multiple entities or locations. It is a decentralized digital database. Since it is distributed in nature, it eliminates the need for a central authority, thus making it immune to cyber-crime. Some of the most popular distributed ledger protocols are Ethereum, Hyper ledger Fabric, R3 Corda, and Quorum. Not only startups but big companies such as IBM and Microsoft are experimenting with blockchain technology. 
    2. Immutable records – refer to those records that can neither be changed nor tampered with by any participants after a transaction has been recorded to a shared ledger. Even if there is a case of error, the only way to rectify it is to create a new transaction.
    3. Smart contracts – refer to the programs stored on a blockchain that run when predetermined conditions are met. When these predetermined conditions are met, a network of computers executes certain actions like releasing funds to the appropriate parties, registering a vehicle, sending notifications, or issuing a ticket. Thus the blockchain is updated that means the transaction cannot be changed. 

    Benefits of Blockchain:

    1. Transparency – Blockchain is a decentralized network that improves the transparency of the system. It uses distributed ledger where all network participants share the same documentation, and all transactions are immutably recorded and are time- and date-stamped. To change a single transaction record it would need collusion of the entire network. Blockchain enables network members to view the entire history of a transaction and virtually eliminates any opportunity for fraud.
    2. Enhanced Security – when a record is made in blockchain it is encrypted end-to-end and can’t be altered. Information is stored across a network of computers rather than a single server, thus making it difficult for hackers to view data. 
    3. Efficiencies – Blockchain solves any time-consuming process through automation and eliminates human-based errors. Transactions become faster and more efficient, documentation on the blockchain eliminates the need for traditional paper-heavy processes and multiple ledgers.
    4. Automation – Transactions get automated with “smart contracts” in Blockchain as it reduces human intervention. 
    5. Reduced Costs: Blockchain technology eliminates the dependency on third-party vendors. It lets consumers interact directly with one another. Moreover, Blockchain technology reduces the need to review documentation again and again as everyone has a single immutable version of the documentation.

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    Also read:

    Blockchain Technology and its uses

     

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