Blockchain technology is an open-distributed digital ledger technology every participant on the network is called node. To add information on the it there is need for consensus i.e more than 50% agree.
Block refers to any piece of information or transaction. Each block has an alphanumeric number. Hash act as identifier of each block. It also contains hash of previous block.
It has 3 layers – protocol layer, networking layer, and application layer.
Characteristics of Blockchain
- Decentralized
- Distributed
- Transparent
- Consensus
- Immutability i.e once information is finalised without consensus it cannot be modified.
Applications Of Blockchain Technology
- Cryptocurrency – It is a virtual currency like Bitcoin, Ethereum, Ripple etc.
- It can be used to bring transparency in land record management. This would reduce litigations related to ownership of land.
- Super CERT made by NITI Aayog, ISB and Bitgram to deal with the issue of fake certificates
Cryptocurrency
Bitcoin
Mining of Bitcoins- Process of verifying the transaction of bitcoins by nodes which solve complex computational problems using their computing power. It is a proof of work and those who successfully verify the transactions are rewarded by Bitcoins.
There are limited numbers of Bitcoins i.e 21 million.
Halving-After verifying 2,10,000 blocks the reward is reduced by half. ( Verifying 1 block gives 25 bitcoins)
Ripple
It is another cryptocurrency based on proof of stake i.e for mining ripple there is need to put one’s own cryptocurrency at stake. This is not case for bitcoins.
Another concept related to cryptocurrency is Proof of Burn i.e. in order to participate in mining of cryptocurrency one has to pay a fee.
Issues
- Low usage of digital currency by masses would further increase digital dividend.
- It is not backed by any asset.
- It could lead to money laundering and financing of crime and terror activities.
- Not only that it is highly volatile currency in terms of price fluctuation.
FAQs
What is blockchain technology in simple terms?
It is an open-distributed digital ledger technology in which every participant on the network is called node. To add information on the blockchain there is need for consensus i.e more than 50% agree.
What is blockchain technology with example?
This technology enables a decentralized peer to peer network examples Healthcare, Smart contracts, Internet of things and Logistics etc.
Is blockchain the future?
Absolutely, it is the future because it is transparent, consensus, distributed and decentralized.
