What is Blockchain? Working, History, Applications & Future

The power of existing ledgers is limited because the data stored on them can be altered or deleted. Therefore they cannot be trusted to provide a clear transparent image. There exists a gap of trust in current business transactions.  This is why we depend on third parties to maintain our finances and ensure that our ledgers reflect our true operations. We cannot do business without them. What if we didn’t have to depend on third parties? What if we had some way to preserve the integrity of our ledgers on our own? That would eliminate the dependencies on all external intermediaries and empower individuals to manage their own affairs. This is exactly what blockchain can do for us. Blockchains are distributed ledgers that are open to everyone. Everyone can look at them, but once data has been created not even the editor can tamper with them. Blockchain functions like Wikipedia, anyone can alter the data in the blockchain and create new data. However, unlike Wikipedia, the data is not stored on a central server or regulated by a central party.  Rather the data is stored in millions of computers worldwide and regulated by all the computers in the network. Once the data has been recorded inside the blockchain, it becomes extremely difficult to alter that data.  In simpler words, a blockchain is a decentralized online ledger that records all transactions permanently without needing any authentication from any third party or intermediaries. How does Blockchain Technology Work? Blocks are the building blocks of the blockchain technology. Each block in the blockchain consists of three elements: Data Hash Previous Hash Data This is the information that has been stored inside the block. It varies from one blockchain to another. A blockchain containing the health record of the patient may record the temperature, blood pressure and heart rate of the patient at any particular time. Hash The Hash is the unique identification code of every blog. No two blocks in the blockchain can have the same hash code it is like the digital fingerprint of the blocks. If data inside the block is changed, the hash of the block changes as well thus creating a new block. This is what makes the blockchain so secure. Previous Hash Each block contains the hash of the previous block that it has evolved from. The common hash address between the newly created block and the original block is what creates the chain. It is this technology of digital stamping that makes the block chain so secure. For instance, suppose there are three blocks A, B and C. The first block, called Genesis block, is unique because it is the first one in the chain, therefore, it will not have a hash address of the previous block. The Blocks A, B and C are chained together due to the commonality in the hash address of two consecutive blocks. If someone tries to tamper block B and change the data stored on it, the hash address of block B will change. This will make the chain invalid as the hash address of block B will no longer correspond to the hash address of Block C. Such a change can easily be detected in the system. However, only hashing is not enough to keep the data secure. As modern computers are fast, hackers may override the whole chain by tampering with all the blocks in the chain and recalculating the hash codes. A mechanism called proof of work is used to add another layer of security to the blockchain. This mechanism slows down the creation of new blocks. In the...
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