Cryptocurrencies like Bitcoin and Ethereum are powered by a technology called the blockchain. At its most basic, a blockchain is a list of transactions that anyone can view and verify. The Bitcoinblockchain, for example, contains a record of every time someone sent or received bitcoin. Cryptocurrencies and the blockchain technology that powers them make it possible to transfer value online without the need for a middleman like a bank or credit card company.
Almost all cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, are secured via blockchain networks. Which means their accuracy is constantly being verified by a huge amount of computing power.
Due to the cryptographic nature of these networks, payments via blockchain can be more secure than standard debit/credit card transactions. When making a Bitcoin payment, for instance, you don’t need to provide any sensitive information. That means there is almost zero risk of your financial information being compromised, or your identity being stolen
Blockchain technology is also exciting because it has many uses beyond cryptocurrency. Blockchains are being used to explore medical research, improve the accuracy of healthcare records, streamline supply chains, and so much more.
What are some advantages of blockchains?
- They’re global: which means that cryptocurrencies can be sent across the planet quickly and cheaply.
- They increase privacy: Cryptocurrency payments don’t require you to include your personal information, which protects you from being hacked or having your identity stolen.
- They’re open: Because every single transaction on cryptocurrency networks is published publicly in the form of the blockchain, anyone can scrutinize them. That leaves no room for manipulation of transactions, changing the money supply, or adjusting the rules mid-game. The software that constitutes the core of these currencies is free and open-source so anyone can review the code.
- Highly Secure It uses a digital signature feature to conduct fraud-free transactions making it impossible to corrupt or change the data of an individual by the other users without a specific digital signature.
- Automation Capability It is programmable and can generate systematic actions, events, and payments automatically when the criteria of the trigger are met.
How Does Blockchain Technology Work?
In recent years, you may have noticed many businesses around the world integrating Blockchain technology. But how exactly does Blockchain technology work? Is this a significant change or a simple addition? The advancements of Blockchain are still young and have the potential to be revolutionary in the future; so, let’s begin demystifying this technology.
Blockchain is a combination of three leading technologies:
- Cryptographic keys
- A peer-to-peer network containing a shared ledger
- A means of computing, to store the transactions and records of the network
Cryptography keys consist of two keys – Private key and Public key. These keys help in performing successful transactions between two parties. Each individual has these two keys, which they use to produce a secure digital identity reference. This secured identity is the most important aspect of Blockchain technology. In the world of cryptocurrency, this identity is referred to as ‘digital signature’ and is used for authorizing and controlling transactions.
The digital signature is merged with the peer-to-peer network; a large number of individuals who act as authorities use the digital signature in order to reach a consensus on transactions, among other issues. When they authorize a deal, it is certified by a mathematical verification, which results in a successful secured transaction between the two network-connected parties. So to sum it up, Blockchain users employ cryptography keys to perform different types of digital interactions over the peer-to-peer network.
There are three types of blockchain
- Public blockchain.
A public, or permission-less, blockchain network is one where anyone can participate without restrictions. Most types of cryptocurrencies run on a public blockchain that is governed by rules or consensus algorithms.
- Permissioned or private blockchain.
A private, or permissioned, blockchain allows organizations to set controls on who can access blockchain data. Only users who are granted permissions can access specific sets of data. Oracle Blockchain Platform is a permissioned blockchain.
- Federated or consortium blockchain.
A blockchain network where the consensus process (mining process) is closely controlled by a preselected set of nodes or by a preselected number of stakeholders.
Benefits of blockchain—The business value
The use of blockchain technology is expected to significantly increase over the next few years. This game-changing technology is considered both innovative and disruptive because blockchain will change existing business processes with streamlined efficiency, reliability, and security.
Blockchain technology delivers specific business benefits that help companies in the following ways:
- Establishes trust among parties doing business together by offering reliable, shared data
- Eliminates siloed data by integrating data into one system through a distributed ledger shared within a network that permissioned parties can access
- Offers a high level of security for data
- Reduces the need for third-party intermediaries
- Creates real-time, tamper-evident records that can be shared among all participants
- Allows participants to ensure the authenticity and integrity of products placed into the stream of commerce
- Enables seamless tracking and tracing of goods and services across the supply chain provides food safety with Oracle Blockchain Platform.