There are many trends revolving around the digital world. And if you are pretty aware of it, the word “blockchain” should be familiar to you. Understanding the blockchain shouldn’t be difficult because it is a kind of database.
As we know, the particular database usually stores information. But there’s a significant difference that we can see in the blockchain. It stores data in the blocks that are chained together. So, when there is a change, the new data will be stored in the fresh block. Once the empty block is filled with the new data, it is chained to the previous block (where the old data stored). In this case, the block which stores the data will be chained together in chronological order, preserving the history of the information from the early to the latest.
There are different types of information that can be stored in the blockchain. But when we tie it with the cryptocurrencies, it can work as the ledger of the transactions.
How the data is being stored
Blockchain has a different way to collect information. Its system tends to collect particular information in groups, or also known as blocks. These blocks hold a set of information.
Each empty block has specific capacities of storage. When there’s a transaction, the information will be sent to the empty block. The newly filled block will then be chained to the predecessor filled blocks. The same thing will go on and on to form the chains of the data. This chain of captured information is called a blockchain.
While conventional databases store the data into the tables, the blockchain stores the data into the chunks or blocks that are chained.
In this system, the data is irreversible in a decentralized nature. There is no third party that can tamper with the information within the block. Each block has an accurate timestamp to inform when the information is added to the chain.
The decentralized system
In the centralized system, the database will be stored on a series of computers. Bitcoin is decentralized. That means the database will not be stored in one place.
In the Bitcoin example, these computers are operated by individuals and groups around the world. In the centralized system, a large company will need large space to host thousands of computers under one roof. They need huge resources, electricity, space, as well as money to maintain the server. But in the blockchain, each computer of individuals or groups is scattered around the world. These computers are operated by separated individuals or parties.
While decentralization is common in Bitcoin’s blockchain, some private centralized blockchains do also exist. It is usually owned by a private institution or entity.
Top advantages of blockchain
The blockchain has been approved by many businesses and enterprises. Besides cryptocurrencies, there are a lot of benefits of blockchain which can help to improve your business.
The good transparency
Transparency is a distinctive perk that the blockchain offers. The transaction ledger is open for viewing, informing the involved parties to know what happens in the transactions. In the financing services, this will add the professionalism aspects.
In the conventional banking system, we often complain about the concealing information given by the bank representatives. But in the decentralized system backed by blockchain, it won’t happen.
The efficient nature of the blockchain
Because of the decentralized system offered by the blockchain, it removes the need to add middlemen in the transactions. In the international money transfer, for instance, you don’t need to wait for days until your bank sends your money to your recipient.
With Bitcoin backed by blockchain, you can send or receive the money cross-border without having any hassle. Since there is no third party that intervenes in the transaction, it can be done only in a few seconds to minutes. You no longer need to wait for a long time to wire the money.
The other example is in the real estate niche. The blockchain can support smart contracts which will automatically update the ownership records and other changes when certain conditions are met.
With the absence of a third party, you can rest assured that your transactions are safely done without any hassle.
Many IT experts agree that blockchain is more secure than other systems. The reason is obvious. Each new transaction will be encrypted and chained to the previous transactions. When someone wants to tamper with the information, the chain systems will automatically fix the data. There’s no way that irresponsible people manipulate the data. Blockchain is imprenetable. It is impossible to change the data inside the block once it is filled.
Tracking your transactions
The blockchain ledger presents the audit trail to follow. One can trace where the stuff came from. It will help the users to confirm the authenticity of the assets they transact. The security will be improved so that you can have peace of mind right there.
In the food production business, it can be used to track the supply chain from the food factory to the distributor. In the real estate industry, it can be used to track the former landlord or ownership tracking. If you are using the blockchain in the art industry, it can be used to prove the ownership of art.
The data is something you need to protect. Blockchain is a real savior. It can create a solid record that no one can change or tamper. It also comes with end-to-end encryption to make sure that no one can use it for malicious intent.
The blockchain will also make the personal data anonymous so that the other parties won’t capture your name in the equation. They lock it since the actual information is spread across the network of computers rather than an individual device. This will confuse the hackers to pinpoint the exact location of the service, making them not tempted to bother your personal data.
Increase the speed
As we know, traditional paper transactions require more time and are sensitive to human errors. Let’s say that you want to pay for a credit card in your bank. You will need to come to the teller first, filling the form manually, and wait for half an hour in the queue until your turn is up. The blockchain can cut all of those inconveniences.