The what, why, and how of ‘blockchain’ technology

So What Is A Blockchain?

As the name suggests, a blockchain is a chain of blocks that contain information. Blockchain’s history dates back to 1991 when a group of researchers published the article ‘How to Time-stamp digital documents’ in the journal of cryptography. However, it became prevalent only when Sathoshi Nakamoto, the creator of ‘Bitcoin’ implemented it in the year 2009.

Why is it necessary now?

Blockchains have been around for a while. However, its true potential has been discovered only recently.

  • Increased Digital Processing Power
  • Rapid Growth In Cybercrimes
  • Rise Of Bitcoin And Cryptocurrency

How does it work?

Several characteristics are necessary for developing or using a blockchain. The value of a blockchain is entirely dependent on the distributed security system.

  • A Cryptographic Hash
  • Unchangeable Digital Ledger
  • Nodes
  • Consensus Protocol
  • Mining Or Block Validation

Challenges

Even though the blockchain proves to be a beneficial technology, it has its share of disadvantages as well.

  • Blockchain is not easy to implement and some of the concepts are still new and evolving.
  • Although blockchain technology is secure, security issues might occur in case of a 51 percent attack. According to Satoshi Nakamoto, a 51 % attack is when an individual or a group has more than 50% of the mining power. This prevents other miners from creating blocks or transactions.
  • Setting up the initial blockchain infrastructure can prove to be expensive. Therefore, it is not a very cost-efficient technology as of now.
  • Performance is a major concern in blockchain technology. Every transaction is distributed in the network and requires the approval of each node. This may require more time.

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Harshni

Harshni

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24| Cyber security enthusiast| I write about everything from cyber security to short stories.