Table of Contents:
- 1. Introduction
- 2. Blockchain – description and main features
- 3. How to use Blockchain?
- 4. Who uses Blockchain?
- 5. Advantages of using Blockchain
- 6. Disadvantages of using Blockchain
- 7. Summary
Everyone, who is looking for online earing methods and new investments, has heard about crypto currency. It is a brand new digital currency that has been slowly revolutionizing the market for almost 10 years now. Everything started from Bitcoin, pretty known currency. Some time ago its value amounted around several dollars. Now, after several years, its value approximates at thousands of dollars. The more important thing is that its value is still increasing! What is the reason Bitcoin became so popular? Next to decentralization, effectiveness, innovation, and some other aspects, the key reason why it gained on popularity is because it uses brand new technology that is not only incredibly safe, but it can also change the way we perceive some of the essential aspects of our lives.
To understand how Bitcoin and other alternative crypto currencies work, you ought to know more about Blockchain. So, let us present you this technology – basic information regarding its functionality, how it operates, what are the ways of utilizing it, its advantages, and, as it happens in terms of almost everything in our lives, its flaws. The article aims to provide you wish some answers on questions you may have regarding Blockchain in overall!
Blockchain – description and main features
Basically Blockchain is a brand new technology that makes use of our PCs computer power to perform highly advanced and complex calculations. In other words, we use our CPUs and GPUs in order to process information. It uses an open source model, which basically lets anyone and everyone, who possess enough knowledge, to create an application that is based on Blockchain. What’s more, it is very important to know that Blockchain is created on a peer to peer architecture. We can understand this as a technology that doesn’t need any central computers or hosts to work. Everything works independently and is stored in numerous devices all over the world, ensuring safety from losing the data would get lost if everything would be lost in case of storing the data on central computers.
The possibility to use Blockchain arises thanks to its security and safety. A lot of people consider Blockchain as Data Guardians, since the block of chains don’t use classic method of saving data. Instead, it guarantees us immutability of data that was already introduced as well as their validity thanks to the use of special system that checks their legitimacy. The data is stored in the form of blocks, which are set one after another, creating the titular chain of blocks, or Blockchain.
How to use Blockchain?
There are many different approaches to the use of Blockchain technology. There is one, already known and tested method of using Blockchain, and it uses peer to peer mechanics for managing the cryptocurrency. Thanks to hundreds of thousands of users, who lends their computing power to store the data of online transactions with the use of cryptocurrencies. Blockchain allowed Bitcoin to be a successful currency that is being used throughout many years and it is not going to change any time soon.
However, in addition to transactions thanks to currencies, you can also use this innovative technology to many other services. One of the most promising methods of using Blockchain is in banking. The whole financial sector involves numbers and digital transactions, as well as Internet access to perform any action. That is why a lot of people believe that Blockchain is the future of Internet banking. Of course, there is still a lot of work to be done in order to make it possible to use the chain of blocks for the purpose of accounting books. Other ways of using Blockchain includes state administration and digital signature that involves it, the system of document authentication, notarial signature, and many other government actions. All these activities may be performed without the necessity of involving public institutions.
We cannot forget about many other branches of services that find this technology interesting. In addition to financial and government areas, even energetic and trading companies believe that Blockchain can be, in some ways, used to not only facilitate some processes, but in many situations to completely replace them, providing us with clear and very easy system.
Who uses Blockchain?
A lot of you probably think that Blockchain is a technology that sounds incredible well and almost perfect, but what about practical utilization of these services? Who uses Blockchain? There are several gigantic organizations that makes use of the chain of blocks. Estonia, the country itself, decided to introduce Blockchain to its services by implementing the so-called ID-card system. Estonian e-Health Records use this technology thanks to which our data is not only stored safely, but the flow of the data is fluent from one institution to another, improving the effectiveness of all matters that we have to take care of in governmental facilities.
Yet another example, and yet another country that introduced Blockchain to its structure is Georgia. The government decided to create a protected registry to manage the deeds of ownership, parcels, and other premises. Next to countries, there are other organizations and people that decided to base a part of their business of Blockchain. One of them is Elon Musk, a person who is best known for being a director of PayPal services and Tesla Motors. He decided to connect his SolarCity project, which invests in not only producing and storing solar energy, but also in distributing and managing this energy, with Blockchain technology.
Advantages of using Blockchain
There are a lot of advantages that we already mentioned. We can see how many positives Blockchain technology has by simply watching the growth of cryptocurrencies. The thing that characterizes Blockchain is that it is still very fresh and undiscovered science that can later on occur to be incredibly important for the development of industry. One of the most essential advantages that are at this moment known and successfully applied are as follows:
- Decentralization – Decentralization is responsible for Blockchain’s huge popularity and its safety. No central computer, no host that will manage the network – there is no one who controls this whole thing!
- Impossible to modify – Thanks to calculating tons of megabytes every minute by different nodes that are not connected to each other, it is impossible to modify data that is stored with the use of Blockchain.
- Responsible payment method – Responsibility for transactions is something banking services have been struggling for quite a long time. Now, thanks to the use of immutable and constant Blockchain, everyone can follow each and every entry. It is clear way of storing all the essential data that will later on be required to apply for policies and other documents.
Disadvantages of using Blockchain
Sadly, every rose has its thorn and as it concerns every technology, Blockchain has got some flaws we need to be fully aware of. It is incredibly important for all the people, who not only wish to learn how to use Blockchain for their own purpose, but also the people, who are looking for new investments and other projects that will be based on Blockchain technology. That is why you should remember that:
- Hard drive space requirements – In order to store the blockchain data, it is essential to have hundreds of Gigabytes available. Obviously, it may not be a problem for now or for the next several years. Nevertheless, some people noticed that, as in the example of Ethereum, the growth of blockchain data space jumped from 50 GB up to 200 GB within a couple of years. The more people are connected with the utilization of this technology, the more transactions occur, and the more data needs to be recorded. That is why it is incredibly likely that we will not witness steady growth, but rapid and unpredictable one.
- Slow payment method – this particular disadvantage regards only the Blockchain technology that is applied for the cryptocurrencies and using it for payments. Each transaction needs to be checked several times and added to a block that will later on be connected to the chain of blocks before the transaction is completed. It prolong the payment method up to several minutes (even 20 minutes).
Summary – Now you know what Blockchain is
A lot of people consider Blockchain as one of the most innovative and one of the most promising technologies that will dominate the market in recent years. However, we still have to remember that it is relatively new and to be honest – unpredictable piece of science that still needs further research and development. We should bear in mind that such technology exists and some day may become very important, or even mandatory for everyday lives.
We believe that the article presented above includes the most important elements of Blockchain and that thanks to our efforts, you will know how everything works, what are possible methods of utilizing blockchain, and what are the basic features thanks to which this technology works so well without any problems.