Imagine a world where you can ensure making any number of confidential monetary transactions without the constant dread of getting hacked. Everything and I mean everything in your system or cloud today is prone to the threats of unauthorized access and manipulation and no amount of Cybersecurity software or schemes can help you change that. The more advanced the security, the better the trespassing methods. The world needs a highly secure encryption system that is way too tedious for any hacker to get into. Blockchain tends to fulfill a larger portion of this premise.
Blockchain Technology is exactly what you picture it to be. Multiple blocks of encrypted data linked to one another, forming a secure information chain of sorts. Some of you might think of this concept to be quite a cliché and it is very logical to think so. But what separates Blockchain from all other data storage and transmission systems is the set of protocols it implements, including Proof-of-word, Hash Encoding and Peer-to-peer Communication Standards.
The concept of Blockchain was originally devised in 1991 by a small group of researchers in order to maintain a timestamp for their digital documents to avoid backdating. But it didn’t catch a lot of attention until 2008 when Satoshi Nakamoto (pseudonym) discovered the various applications of Blockchain. Along with Blockchain, Nakamoto introduced the first ever digital currency, Bitcoin which is maneuvered using Blockchain Technology. A majority of monetary transactions as well as confidential operations today, all across the world, utilize Blockchain.
A Ledger is a piece of contract where all the entries of mutual transactions are maintained. Money stored in Banks or Institutions is not a physical entity. Thus, the deposit or withdrawal of currency is nothing but a transcript of record entries in the ledger. Blockchain implements the concept of Distributed Ledgers, wherein the authority of verifying and updating records is made available to all the trusted members of the chain. Addition, deletion or manipulation of any block in the chain has to be approved and verified by all the nodes in the Blockchain.
A Block can be seen to be divided into three fundamental constructs. The Data stored, the Hash of the Block and the Hash of the previous block. Necessary information for the transaction is stored in the Data Partition. Hash is the encrypted address of each block in the chain. The hash value of the previous block is stored for the purpose of successfully appending the new block to the chain. Consider a money transfer between two individuals executed through Blockchain. In this case, the Data Segment consists of the account information of the sender, the receiver and the amount of currency used for the transaction. A unique hash is generated for each stage of the transaction so as to nurture its security. This hash is only accessible to the verified users of the chain. The Hash of the previous stage of the transaction is included in the block to form a continuous chain.
Even if one of the blocks is broken into, the chain terminates the execution. Due to decentralization and a mutual consensus, one has to tamper each and every block in the chain accurately. This is where the Proof-of-work protocol comes into play. A new block proposed by any user has to be granted access by more than 50% of the members before being appended to the chain. The complexity of this firewall makes it almost impossible for unauthorized sources to obtain an illegitimate access to the Blockchain.
Smart Contracts are a powerful application of Blockchain. Solidity is a leading programming language used to execute Smart Contracts across multiple Blockchain platforms. Ethereum is an open-source blockchain-based distributed computing software used to implement the functionality of Smart Contracts. Bitcoin, Ether, Ripple, Tether, Litecoin, EOS, Dash and many other cryptocurrencies function with the help of Blockchain Technology. This technology has managed to gather a lot of attention from several investors, thus ensuring abundant success in the days of tomorrow!
Blockchain: The Pinnacle of Cyber Security? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.