What is Blockchain and how does it work?
Blockchain is a distributed ledger technology – a digital, decentralized database that records transactions across many computers.
What is Blockchain?
Blockchain is a distributed ledger technology – a digital, decentralized database that records transactions across many computers so that the record cannot be altered retroactively. Cryptography can be used to verify and secure transactions and control the creation of new units of a particular cryptocurrency.
The decentralized nature of blockchain implementation makes it hard to alter records, even when many computers are involved. A public blockchain is like an open ledger anyone can read or write. That's why it is more attractive than other cryptocurrencies controlled by its developers. Public blockchains usually use a Proof-of-work (PoW) consensus algorithm.
During the blockchain hype, there is often a lack of clarity regarding how it will impact the world economy. Many believers in blockchain envision a decentralized future where most things are automated, and transaction costs are reduced. Cryptocurrencies like Bitcoin were created to achieve this goal of decentralizing various industries, but due to their association with criminal activities, blockchain has not been fully adopted. Another issue is that blockchain is still a new technology, and few people are well versed in it. As a result, they fail to see its potential.
Decentralization in blockchain refers to the movement of control and decision-making from a centralized entity (person, organization, or group) to a dispersed network. Decentralized networks aim to lower the level of trust that users must place in one another and inhibit their capacity to assert authority or control over one another in a manner that degrades the network's functionality.
The idea of decentralization is not new. When developing a technology solution, there are three basic network architectures: centralized, distributed, and decentralized. While blockchain technology frequently uses decentralized networks, a blockchain application itself cannot simply be classified as "decentralized" or "centralized." Instead, decentralization should be applied to all components of a blockchain program on a sliding scale. Greater and more equitable service can be accomplished by decentralizing the management and access to resources in an application. Decentralization often has some drawbacks, such as a decreased transaction throughput, but in most cases, these drawbacks are worth the better stability and service levels they offer.
There are many benefits to decentralizing the administration of and access to resources within an application. Even if there are certain downsides to decentralization, such as a reduction in transaction throughput, in the long run, these disadvantages are outweighed by the benefits of increased service quality and stability.
Distributed ledgers are databases that are shared across the network and scattered across several sites. Distributed ledgers are ledgers that have been extended around the globe and are under global control. As a result, several parties in various locations and institutions hold and restructure dispersed ledgers.
In a blockchain, the term "immutable ledger" refers to any records that can't be changed. This means that you can't change data easily. This makes sure that security is pretty tight. If something is immutable, it is hard to make changes without the help of other people.
With blockchain implementation, the basis of many transactions becomes an immutable ledger. This means that everyone in the network has access to a ledger that can't be altered. As a result, it is harder to commit fraud, and it provides an additional level of security.
What Gives Blockchain Its Power?
Let's understand how blockchain technology works.
Blockchain is a decentralized network. As a result, for any blockchain transaction to take place, all network members must have a consensus. A transaction cannot go through without most of the network's agreement. Therefore, blockchain implementation ensures that all transactions are protected to the highest level.
Blockchain is public, and anyone can access the network. Since blockchain technology is a decentralized system, any transaction on a blockchain network can be seen by everyone in that network.
Blockchain is a highly secured decentralized network. All nodes in the blockchain network must agree and accept any request to access any data stored there. In other words, the network highly secures any data stored in a blockchain. Since transactions are immutable, the data cannot be altered retroactively.
Blockchain technology can process large volumes of information quickly. For example, blockchain can be implemented to increase efficiency in the banking industry, especially in Africa.
Each client account on the network has its specific and unique transaction history that can be used to profile clients. With all this data available on the blockchain, a bank can monitor client transactions and make more accurate lending decisions by generating reports based on analysis of these transactions.
The distributed nature of blockchain technology provides enhanced privacy. In a centralized system, all the data is stored on a single server. And since that server has access to all the information, it is possible to view details of any transaction on that account. This can be extremely disturbing, especially if you are one of the users accessing information needed by someone else.
With blockchain implementation, even though no new data is added every time a new transaction occurs, data cannot be accessed by anyone except those authorized.
Blockchain offers a good solution for many applications requiring transparency, decentralization, integrity, and security without requiring a trusted third party. The technology can potentially disrupt many industries, including banking, payments, remittances, capital markets, asset management, insurance, and lending. However, several challenges in blockchain implementation must be addressed to realize the full potential of blockchain for different applications and use cases.
At MicroAgility, Our blockchain consultants can help you understand how blockchain can be used in your business and assist you in implementing the technology.
We have vast experience in adopting cutting-edge technologies in clients' businesses. We know how to implement blockchain technology based on your needs and requirements for different domains, ensuring security, confidentiality, and scalability. Our blockchain consulting services can help you choose the most suitable solution for your business and bring it to the next level with seamless implementation.
MicroAgility dedicated blockchain consulting teams consist of diverse talent, including:
Project Managers/Scrum Masters with extensive and hands-on expertise in Blockchain projects.
Business Analysts to help you recommend ideal business requirements for blockchain solutions tailored to your needs.
Software Engineers & Solution Architects to help build a custom architecture of blockchain solutions for your business
UX Designers to design user-friendly, state-of-the-art digital interfaces for your blockchain platforms and applications.
Blockchain Developers/Quality Engineers to develop customized blockchain applications and platforms.
Contact us today to hire blockchain consultants and learn more about our services.