Deciphering the Term Blockchain
Blockchain in the simplest terms is a structure which acts as a digital ledger to store the transactions carried out through Bitcoin. Bitcoin is a digital currency developed in 2009 to facilitate transactions at lower fees and operates through a decentralized mechanism. All the data associated with the Bitcoin transactions are stored in files called Blocks. Numerous Blocks together form the Blockchain. Thus, Blocks act as distinct parts of the ledger which are added to the Blockchain in a linear and chronological order.
Blockchain acts not only as a medium to store the data pertaining to Bitcoin transactions of exchanges, but also facilitates the sharing of this data among a network of computers to allow its users to access and manipulate it, without the need of any centralized authority. It is primarily a record of all those digital transactions which take place without the traditional mediums of exchange in the form of credit/debit cards or through Traditional Banking Systems. Thus, Bitcoin seeks to eliminate the role of middlemen like banks in carrying out digital transactions and a record of these transactions is maintained by the Blockchain.
How Does It Work?
Blockchain works through a network of computers which must recognize and approve the exchange before it takes place. Only a successful and authenticated transaction is recorded in the digital ledger. Blockchain thus becomes the primary means to ensure that the same Bitcoin, generated once, is not circulated multiple times by examining each transaction through its pre-entered records. Transactions are carried out through a Bitcoin/Blockchain Wallet that generates unique currency for every transaction. It acts as a detailed and transparent digital document accessible by each user.
The entire process of Bitcoin transfer from A to B via the Blockchain is easy to comprehend. When Person A initiates a transfer to Person B, the transfer is recorded in a Block (a page of the ledger). This block is simultaneously shared with all the users through broadcast for approval and validation. Once the block has been validated by the majority of users as valid and unique, it is added as a part of the Blockchain and the transaction is deemed successful.
Scope of Blockchain
The Blockchain technology believed to be revolutionary in its vision and its scope is seen as expanding in the near future. It carries with it huge potential to carry out significant transactions at minimal costs. For instance, it can be used as a medium of transfer of wealth for migrants whose native homelands may not have well-developed banking systems. It is also considered important for its potential to reduce fraud and malpractices in a case of digital transfers as each transaction is recorded in a ledger which is publically accessible and available to every user.
Blockchains carry with them the advantage of speed and time effectiveness. These transactions are authenticated in a maximum time of 10 minutes saving the user the effort of days of paperwork as transactions is validated automatically.It is also considered to be one of the most secure platforms of transactions as it virtually tampers free because hacking a structure with such volumes of complex and secure data is unfeasible.
In a nutshell, Blockchain Technology appears to be the future of transactions with a number of Companies racing to adopt the technology. Not only is this revelation likely to increase the efficiency of transactional services but also carries with it the advantage of reduced costs and transaction fees making it more accessible to the lower income groups. Thus, adopting such technology at an early stage of its incubation is likely to pay off in the decades to come.