Blockchain technology has now become a popular global phenomenon that revolutionized the global financial system. The decentralized nature of the blockchain technology attracts people to it as a secured stock of investment and income. With digital currencies sweeping over the market, the time has now come to learn and understand more about the blockchain technology and the various principles with which operates globally and its advantages.
What is blockchain?
In simpler terms, Blockchain is a ledger that keeps track of all transactions and facilitates the process of recording transactions and tracking of the assets in a business. It is a decentralized public digital ledger. With the blockchain no one can manipulates the transaction data without proper consensus and without altering all the subsequent blocks. The noteworthy point is that everyone can connect to blockchain and can do transactions. Bitcoin and Ethereum are the two of the most popular blockchain in the world. There are four possible blockchain; Public Blockchain, Private Blockchain, Consortium Blockchain and Hybrid blockchain.
- Public Blockchain: It is non-restrictive and permission less blockchain. Any person in this world with both computer and internet can be a part of the public blockchain sequence. Mining and the exchanging of the cryptocurrencies are the two of the most basic uses of the public blockchain technology. The most common public blockchain are Bitcoins and Litecoin Blockchains. Users or nodes of public blockchain are requested to adhere to the laws, rules and regulations strictly to securely use it
- Private Blockchain: It operates only on a closed network. Usually used within an organization, only selected members can be the part of the private blockchain. The centre organization or enterprise is the concerned authority that is entrusted with the controlling, authorization, security, permissions and accessibility of their private blockchain. It is similar to public blockchain but is highly secured, limited and encrypted. These private blockchain are used for the processes like voting, supply chain management, digital identity asset ownership and many other things within an organization. Multichain and hyperledger projects are the two examples of the private blockchain technology.
- Consortium Blockchain: In this type, more than one organizations becomes part of the blockchain and it is semi-decentralized in nature. More than one organization manages everything about that particular network and is used for exchanging information or to do the crypto mining. Banks, governments and organizations are most common adopters of consortium Blockchain. Energy Web Foundation and R3 are the two examples of the consortium Blockchain.
- Hybrid Blockchain: An interlinking of the Public and the Private Blockchains, Hybrid Blockchain works on the characteristic of the both types. With the Hybrid type, users can control who gets access to the data and what data are they accessing. Only some part of the data is shared with the public and the rest is highly confidential and can be accessible only to the limited personals. Dragonchain is the most popular example for the Hybrid Blockchain.
The Principles with which blockchain works
- Decentralization: In blockchain technology, the power is not vested only to one person but the network is controlled by all the participants in the group. This reduces the risk and manages to make the blockchain network highly secured. No one can manipulate or hack or close the chain or shut it down without other participants knowing. Because of this principle of decentralization, blockchain technology is free from hacking and fraud.
- Integrity: Every user of the blockchain is expected to show the integrity. In here, the trust is not forced but all works with the intuition of the user. The user will get appropriate incentives for their honest work and effort. In this way the P2P works with and maintains its integrity.
III. Secured with Cryptography: It is indeed one of the principles with which blockchain works. High level security and encryption is what it offers to all its users. For an authentic user who follows and stick to all the protocols, Blockchain rewards them. But the users who try to mess up with it is strictly punished and such behaviours won’t go unnoticed.
- Inclusive: Blockchain is open to everyone and it won’t discrimate between the users. The speciality is that there is no need to have a bank account to become a part of the network. With zero transaction fee and no third party involvement, Blockchain allows users to transact without any limitations. Both poor and the rich can do investments according to their capabilities without any separate rules for the both.