Blockchain Technology: Working, Importance, Advantages, and Disadvantages

Blockchain technology is a digital ledger that is guarantee security for any record or information, as it works on a decentralized system. This system is even more secure.

What is blockchain technology?

Blockchain technology is a distributed database that maintains a continuously growing list of records called blocks. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

The decentralized character of blockchain makes it so powerful. This means that it is not controlled by any one entity and is not subject to the whims of the government or financial institutions.

How does Blockchain work?

Blockchain technology is a distributed database that maintains a continuously growing list of records called blocks. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin, the first and most well-known blockchain application, uses a block size of 1 megabyte.

Blockchain keeps all the data stored in blocks, which are linked by cryptography. Whenever any new data comes, it enters into a new block. When this block is completely filled, then it is joined with the old filled blocks. Similarly, many blocks together form a chain, which is called a blockchain.

All these data are linked in chronological order. Blockchain technology can store many types of information, but so far it is being used the most in cryptocurrency.

Why is blockchain technology so important?

Blockchain technology is important because it is a digital ledger that can be used to store any type of data securely. There are a few key reasons why blockchain technology is so important.

• First, blockchain is an extremely secure platform. Transactions are verified by a network of computers and are not subject to fraud or manipulation. This makes it a great choice for transactions that need to be reliable and secure.
• Second, blockchain is transparent. Every participant in the network can see every transaction that has ever been made on the platform. This makes it an ideal platform for tracking and recording transactions.
• Finally, blockchain is decentralized. This means that any one entity does not control the platform. This makes it an ideal platform for secure transactions.

Advantages of Blockchain Technology

• Immutable –
  • Blockchain prevents data tampering, which means Once data is entered into the blockchain, it is impossible to erase, replicate or replace. This quality provides more prominent security to information.
  • While Conventional databases can create, read, update and delete to ensure proper application operations. This method is known as CRUD. These data can be manipulated by rogue administrators or third-party hacks.
• Transparency –
  • Blockchain is a decentralized network, which means any network member can verify recorded data. It provides more prominent trust among users.
  • On the other hand, a conventional database is centralized and does not support transparency. individuals are unable to verify information whenever they want. The administration makes a selected set of data public as per their whims.
• Censorship –
  • Blockchain innovation is free from censorship because it doesn’t have control of any single party. Consequently, no single power (including governments) can interfere with the activity of the network.
  • In the meantime, traditional databases have central authorities managing the activity of the network, and the authority can practice control. For example, banks can suspend clients’ records.
• Traceability –
  • Blockchain makes an irreversible review trail, permitting simple following of changes in the network.
  • The conventional database is neither transparent nor immutable. subsequently, no long-lasting path is ensured.
• Smart contracts

Disadvantages of Blockchain Technology

• Speed and performance – Blockchain is significantly slower than traditional databases because it carries out more activities.
  • First, It performs signature verification, which includes signing transactions cryptographically.
  • Blockchain likewise depends on an agreement instrument to approve exchanges. Some agreement systems, like verification of work, have a low exchange throughput.
  • At long last, there is overt repetitiveness, where the network requires every node to play an essential part in checking and storing each transaction.
• High execution cost – Blockchain is costlier contrasted with a conventional information base. Also, organizations need legitimate preparation and execution to coordinate blockchain in their process.
• Data alteration – Blockchain innovation doesn’t permit simple alteration of information once recorded. It requires reworking the codes in all of the blocks, which is tedious and costly. The disadvantage of this component is that it is hard to correct a mistake or make any necessary adjustments.
• Private key – Once lost or forgotten the private key, The owner can’t recover it.

Disadvantages: Blockchain vs Conventional database

Use of Blockchain technology

Blockchain technology cannot be controlled by any organization or individual, so it is a secure means of storing any type of information. Businessmen and venture capitalists are putting billions of rupees behind this technology.

Here is a list of genuine issues where we can utilize blockchain :

• Banking sector
• Secure and full-proof voting management system.
• Supply chain management.
• Healthcare sector
• Real estate sector
• NFT commercial center.
• Keep away from copyright and unique content creation.
• To make an unchanging data backup.

Use of Blockchain in Banking and financial sector

Incorporating blockchain into the banking and financial sector stands to be more profitable than any other industry. Financial organizations just work during business hours, typically five days per week.

Suppose, if you attempt to deposit a check on Friday at 6 p.m., you will probably need to hold on until Monday morning to see that cash deposited in your account. Regardless of whether you deposit your check during business hours, the transaction can still require one to three days to confirm because of the sheer volume of exchanges that banks need to settle. on the other hand, Blockchain never sleeps.

Benefits of Implementing Blockchain in the Banking and financial sector

• By integrating blockchain into banks, customers can see their transactions processed in as little as 10 minutes. Basically, the time it takes in a blockchain is just to link a block to a chain of other blocks, regardless of holidays or the time of day or week.
• With blockchain, banks likewise have the chance to trade assets between institutions more rapidly and safely.
• In the stock trading business, the settlement and clearing process can require as long as three days (or longer, if trading globally), meaning that the money and shares are frozen for that timeframe.

Use of Blockchain in Voting management system

Blockchain is tested in the Voting management system on November 2018 in West Virginia.

• Blockchain could be utilized to work with modern voting systems.
• Casting a ballot with blockchain conveys the possibility to kill political race extortion and boost voter turnout.
• Utilizing blockchain in this manner would make casting a ballot almost difficult to tamper.
• The blockchain protocol would also maintain transparency in the election system, reducing the personnel needed to conduct an election and providing officials with nearly instant results. This would eliminate the need for recounts or any real concern that fraud might threaten the election.

Use of Blockchain in Supply chain management

• Suppliers can utilize the blockchain to record the data of materials that they have bought. This would permit organizations to check the legitimacy of their items as well as common labels such as “Organic,” “Local,” and “Fair Trade.”
• As revealed by Forbes, the food business is progressively embracing the utilization of blockchain to follow the way and safety of food throughout the farm-to-user journey.

Use of Blockchain in Healthcare Sector

• Medical service providers can use blockchain to store their patients’ medical records safely.
• When a medical record is generated and signed, it tends to be composed into the blockchain, which gives confidence to the patients that their records can’t be changed.
• These individual health records could be encoded and stored on the blockchain with a confidential key, so they are just opened by specific people, in this manner ensuring privacy.