Blockchain Technology – Notes For W.B.C.S. Examination.
The Blockchain technology has become a regular news item with the emergence of cryptocurrencies like Bitcoin. Now, this technology is disrupting almost all markets, changing the way we do our day to day business. Yes, the blockchain technology is changing our world.Continue Reading Blockchain Technology – Notes For W.B.C.S. Examination.
Let’s decode the latest buzz word – The Blockchain Technology – in this post. Thank you for the excellent feedback on our earlier articles in this series – on Artificial Intelligence, Internet of Things (IoT), and Automation. Feel free to post your feedback on this article in the comment section at the post-bottom.
Comparing Blockchain to an Excel Sheet
Imagine a Microsoft Excel Sheet file in your laptop with details of some transactions you made. You can call it a ledger.
Now, imagine that your Excel Sheet file is copied to hundreds of your friends’ computers, connected to each other forming a network. The ledger in your laptop has become a distributed ledger.
Then imagine that this network of computers is designed with a technology to regularly update this Excel Sheet, whenever you or your friends update the ledger.
What is a blockchain?
In simple terms, blockchain is a digital ledger.
Wondering what is a ledger?
Ledger is a book containing accounts to which debits and credits are posted from books of original entry.
A blockchain is a digitized, decentralized, public ledger. So simple, right?
Defenition of Blockchain
The blockchain is an incorruptible digital ledger of transactions that can be programmed to record virtually everything of value.
Each list of record in a blockchain is called block.
So a blockchain is a continuously growing list of records called blocks, which are linked and secured.
Who invented blockchain technology?
Blockchain Technology was invented by Satoshi Nakamoto in 2008 for use in the cryptocurrency bitcoin, as its public transaction ledger. Satoshi Nakamoto’s aim in creating the decentralized Bitcoin ledger—the blockchain—was to allow users to control their own money so that no third party, not even the government, would be able to access or monitor it.
The creator of Bitcoin, Satoshi, disappeared back in 2011, leaving behind open source software that the users of Bitcoin could update and improve.
The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem without the need of a trusted central authority or central server.
The bitcoin design has been the inspiration for other applications.
Bitcoin Is To Blockchain As Email Was To The Internet
In the 1990s, when the internet technology (TCP/IP or HTTP) was in the native stages, email was the first major application. Later new applications like web browsers came. Websites became popular. People started using chat software like Skype. Now if you look at your mobile, see how many different applications are run using the Internet.
Similarly, when blockchain technology emerged, bitcoin was the first major application which used it. Other cryptocurrencies followed the trend. Now, blockchain technology is used in a variety of applications like security, online voting etc.
Internet Technology vs Blockchain Technology
Simply put, the Internet allows computers to exchange information; Blockchain allows computers to record information.
Both use a lot of computers (nodes).
What is the need of blockchain technology?
The blockchain is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or an exchange that was not done with the consent of the parties involved.
The most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on the main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.
Blockchain technology can find applications in the following areas in future-
- Smart contracts – Any industry heavily reliant on contracts, such as insurance, financial institutions, real estate, construction, entertainment, and law, would benefit from blockchain’s indisputable way to update, manage, track and secure contracts. Smart contracts, those that are embedded with if/then statements and be executed without the involvement of an intermediary, also use blockchain technology.
- Supply chain management – Whenever value changes hands or the status of asset changes, blockchain is ideally suited for managing the process.
- Asset protection – Whether you’re a musician who wants to ensure you get royalties when your music gets played or a property owner, blockchain technology can help you protect your assets by creating an indisputable record of real-time ownership.
- Personal Identification – Governments manage vast amounts of personal data from birth and death records to marriage certificates, passports and census data. Blockchain technology offers a streamlined solution for managing all of it securely.
- Payment processing – Blockchain has the potential to be highly transformative to any company that processes payments. It can eliminate the need for intermediaries that are common in payment processing today.
- Crowdfunding – As with traditional crowdfunding, a blockchain powered crowdfunding campaign seeks to secure investment for a new project from an interested community. But in this instance, funding is most likely to come in the form of bitcoin or other cryptocurrencies.
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