The Blockchain Revolution
In the past, there have been many attempts to create digital currency, but they have always failed due to lack of trust. If someone creates a new currency, then how can one trust that they won’t give themselves a million units of the currency or steal others units for themselves?
Bitcoin was created to solve this problem using a kind of database called blockchain. It, unlike most conventional databases such as SQL, has nobody in charge; it’s run by people who use it. This prevents abuse of power and ensures security . What’s more, bitcoins can’t be faked, hacked or double spent – so those that own this money can trust that it has some value. Blockchain was developed by a person or group of people known by the nome de plume Satoshi Nakamoto. It allows digital information to be distributed and not copied and has created the backbone of a new type of internet.
Blockchain is based on peer-to-peer (P2P) topology and sometimes referred to as Distributed Ledger Technology (DLT). It makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing using algorithms such as MD5,and the SHA-family(Bitcoin uses SHA-256). It allows data to be stored globally on thousands of servers while allowing anyone with access to the network to see the entries of others on the network in near-real time. This makes it difficult for a single user to gain control of the network. Blockchain helps reduce risk, stamps out fraud and brings transparency in a scalable way for myriad uses.
An analogy for understanding blockchain is the way Google Docs operates. When a document is created and shared with people, the file is distributed instead of copied and distributed. This provides a decentralized chain that provides everyone access to the file at the same time. All changes are recorded in real time and no one is locked out while changes are being made by other parties. This makes the entire process completely transparent. Blockchain is certainly more complicated than Google Docs but the analogy is apt because it illustrates the critical values of the technology.
The blockchain is an innovative and yet simple way of passing information from point A to B in a fully automated and safe manner. One party of a transaction initiates the process by creating a block which is then verified by millions of computers across the internet. This verified block is then added to the chain and stored across the net. It has its own unique record with a unique history. This makes falsifying a single record virtually impossible as it would mean falsifying the entire chain in innumerable instances. As more blocks are added to existing blockchains such as Bitcoin and Ethereum, the security of the ledger also increases.
Blockchain technology accounts for the problems of security and trust in several ways. New blocks are always stored chronologically and linearly, i.e. a new block is always added at the “end” of the blockchain. If one takes a look at Bitcoin’s blockchain, you’ll see that each block has a position on the chain, called a “height.” As of August 2020, the block’s height had topped 646,132. After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of the block. That’s because each block contains its own hash, along with the hash of the block before it. If that information is edited in any way, the hash code changes as well. Recalculating the hashes of every other block in order to cover up tracks would require enormous and improbable amounts of computing power. In other words, once a block has been added to the blockchain, it is nearly impossible to edit or delete it.
Blockchain which emerged in 2016 and 2017 as a real-world tech option is set to change the IT industry the same way open source software did 25 years ago. Just like Linux took nearly a decade to become the cornerstone in application development, Blockchain will certainly take years to become a lower cost, more efficient way to share information between open and private business networks.
Blockchain has an infrastructure cost but no transaction cost. It can transfer and store money, but it can also replace all processes and business models that rely on charging a small fee for the transaction between 2 parties. This cuts-off the fee processing middleman while eliminating the need for a match-making platform.
It threatens businesses like Uber, Airbnb, Fiverr, and other companies that play the role of a middle-man or platform for transactions to take place between two parties by eliminating the need for a transaction processing fee. Similarly, it can make the sale of recorded music profitable for artists by cutting out music companies and distributors like Spotify and Apple Music. The financial world would also take a hit as blockchains would change the way stock exchanges work, loans are offered, and insurances contracted. The financial system, after all, is built on taking a small cut of the money for the privilege of facilitating the transaction. Bankers would no longer be gatekeepers of money and stockbrokers would no longer be able to earn commissions.
It is being claimed that blockchain will play a very important role in the new space race. Experts have claimed that with space activities ramping up in anticipation of NASA’s ambitious plans to return to the Moon and eventually Mars, blockchain could play a crucial role in the resurgent space industry.
The new space race that will be driven by commercial players could come to rely upon blockchain technology. Some key areas where blockchain could assist are supply chain security, governance and more. Ultimately, the role of blockchain applied in space ventures is yet to be determined, but its properties of decentralization and transparency could become an important aspect of future considerations.
Blockchain is a revolutionary technology that has the potential to change how modern online transactions take place. It allows for a decentralized sharing economy by opening doors to direct interactions between parties using P2P payments. It has the potential of creating crowd-funded capital funds. It can make organizational decision making fully transparent and verifiable. Decentralized storage of files on a network using blockchain protects it from getting hacked or getting lost. Blockchain can protect intellectual property. Digital information can be infinitely reproduced and distributed widely due to the Internet. This while giving a goldmine of free content, allows for blatant exploitation of intellectual property. As a result, copyright holders suffer financially. Smart contracts can protect copyright and automate the sale of creative works, thus eliminating the risk of being pirated.
Dhruv Sinha SY BS.C Economics