What is Blockchain Technology?
Blockchain technology is not an app or company. It is a revolutionary way of documenting data on the internet. The technology can be utilized to develop applications like social networks, messengers, games, exchanges, storage platforms, voting systems, prediction markets, online shops and more. Therefore, the technology is similar to the internet. This is the reason why some are calling it “The Internet 3.0”.
The information recorded on a blockchain can take any form. It can indicate a transfer of money, ownership, a transaction, someone’s identity, an agreement between two parties, or even how much electricity a lightbulb uses. Nonetheless, in order to do this, it requires confirmation from several devices on the network. Once an agreement is reached between these devices to store something on a blockchain, it can’t be removed or altered without the permission of those who reached the consensus.
Blockchain’s name comes from the way it stores data as the information is packed into blocks that link to form a chain with other blocks containing similar information. It’s this way of linking blocks into a chain that makes the information stored on a blockchain so trustworthy. Once the information is recorded in a block, it can’t be altered without having to alter every block that comes after it. Therefore, it’s impossible to remain undetected. It’s also because of this reason that each block strengthens the previous block and thus the security of the entire blockchain. In other words, the more blocks, the more secure the system becomes as an individual would need to tamper with more information. When combined, all of these create an unquestionable warehouse of information, one which is without a doubt true. Furthermore, every block contains the data it records. For instance, a single block can contain a transaction like one list token being sent from person A to B as well as timestamps of when that information was recorded. It will also include a digital signature linked to the account that made the recording and a unique link, in the form of a hash, to the previous block in the chain.
Blockchain’s biggest issue
One of the biggest problems blockchain currently faces is the fact that they are slow and cumbersome. This should come as no surprise as blockchain is a complex and encrypted network that has a distributed nature. This means that transactions can take a while to process, compared to traditional payment systems like cash or debit cards. In fact, bitcoin transactions can take several hours to finalize. Therefore, they are not ideal for paying for your lunch, unless the vendor is willing to wait. In theory, this principle extends to entire blockchain networks. These like a single block are used to store data. However, they have the potential of growing slow and cumbersome as they grow in size. More data or files means more computers will have to access and continuously update the network as it grows. Hopefully, this problem is solved with advances in engineering and processing speeds, but currently this poses a serious issue.
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