Blockchain has three main features that distinguish it from other types of digital record keeping.
It is decentralized
When you think of traditional digital forms of accounting and record keeping, what comes to mind is a central authority, such as a traditional corporate structure, that oversees and manages a primary source of record keeping.
Rather, blockchain relies on a network of computers or nodes, as described above, to verify data and transaction blocks, a system that requires consensus among a majority of nodes before new blocks can be added to the chain. . Thanks to this peer verification, Blockchain development company dependency on third-party services can be avoided, and there is no need for a central authority to control transactions and asset movements.
It’s transparent
Transparency is one of the hallmarks of blockchain technology, because as each block of transactions is verified, it is visible to everyone on the network. That way, each node has a chronological record of the data that has been stored on the blockchain, and no single node can alter that information. If a blockchain is breached in any way, or if there is an error in the data of one node, the other nodes can identify and correct it.
This transparency, in addition to other features, has helped develop the technology that smart contracts need to function on a blockchain network.
it’s super fast
Modern business operations increasingly require real-time updates and responsiveness that require highly sophisticated digital networks (such as the Internet of Things or IoT) or artificial intelligence to function. Blockchain allows for greater speed and accuracy that can support many business operations.
How Blockchain Came About
The use of cryptography as part of a distributed digital system for payments and other transactions emerged in the early 1980s, thanks to the work of cryptographer David Chaum.
In the early 1990s, other researchers, including Stuart Haber and W. Scott Stornetta, sought to improve the verification process by adding timestamps to blocks of transactions that could not be changed, as well as a Merkle tree structure to encode data. . In the late 1990s, data scientist Nick Szabo was working on a currency based on blockchain technology.
But it wasn’t until 2008 that developers working under the pseudonym Satoshi Nakamoto published a white paper that made a clearer case for the use of blockchain in relation to digital currencies, paving the way for Bitcoin, and soon after for many others. shapes. of crypto.
Double spending problem
Among its many breakthroughs, Nakamoto’s research overcame a persistent hurdle in digital finance: the so-called double-spending problem. Although he can’t spend a $10 bill twice, it is possible to double encrypt digital currencies and “spend” those funds more than once. But thanks to the way the blockchain is built, with timestamps and other codes that establish the validity of a payment. As well as the consensus mechanism that governs all transactions, it is practically impossible to execute the same financial transaction twice.
Today, many cryptocurrencies are not only based on blockchain platforms, but a growing number of them use blockchain technology to create smart contracts, non-fungible tokens, and many other applications.
Is the blockchain secure?
One of the main attractions of blockchain is its ability to keep transactions secure, without the use of intermediaries or third parties to verify identities or confirm the exchange of ownership. Blockchain technology is often called “trustless” because there is no need for one entity to confirm the validity of another entity; the blockchain itself takes care of that.
As each new block of data is added to the blockchain, it is added in chronological order, with the latest block at the end of the chain. On the Bitcoin platform, for example, a new block is added every 10 minutes, increasing its “height”. The height of a block can refer to the location of a transaction on the blockchain or the current length of the blockchain. As of April 2021, the height of the Bitcoin blockchain exceeded 677,350 blocks.
Cybercriminals cannot attack a blockchain platform
That does not mean that cybercriminals cannot attack a blockchain platform (there are several examples of hacked blockchains). But the decentralized nature of blockchain platforms offers a form of protection. To alter a block on the chain, a hacker or criminal would need to control more than half of all the computers on the network, a feat that is nearly impossible. And because most blockchains are public, anyone with the right equipment can access the information stored in each block on the blockchain, increasing transparency.
Some of the largest and most well-known blockchain networks, such as Bitcoin, Litecoin, Dash, XT, and Ethereum, are public or permissionless, and typically allow anyone with a computer and an internet connection to participate. Rather than creating a security crisis, having more people on a blockchain network tends to increase security. Blockchain Development services More participating nodes means more people verify each other’s work and report the bad guys.
That is one of the reasons why, paradoxically, private or permissioned blockchain networks that require an invitation to participate can be more vulnerable to attacks and manipulation. Private blockchains may not have the same security because they lack peer verification.
