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What is Blockchain?


Blockchain technology was defined in 1991 by Stuart Haber and W.Scott Stornetta, two researchers who wanted to create a system where document timestamps could not be tampered with. It was introduced for the first time in 2009. This technology contains “blocks” that hold a set of time-sealed transactions. Each block is linked to the prior block and results in a chain.

This system means that blocks don’t need to have serial numbers, the hash enables them to be exclusively identified and verifies their reliability.

Blockchain technology is the idea or theory behind the running of the blockchain. This technology makes crypto-digital currencies protected by cryptography like Bitcoin work, just like the internet makes email possible.

The blockchain is an unchangeable, meaning a transaction or file recorded, and cannot be changed or spread digital record of transactions or data placed in many places on a computer network with many use cases beyond cryptocurrencies.

Similar to many things in the technology world, cryptocurrencies like Bitcoin still count on certain pattern of database that can track large volumes of transactions and keep them saved. It is a solution that many of the world’s largest digital currencies are using it.

As the world gets smarter and inter-connected, cryptocurrencies attract more growing markets that may not have classic banking structure. Various advancing third-world nations have applied blockchain-based national currencies. Blockchain technology is also used by different important charity projects to help those who don’t have bank accounts.

In addition, it gives the chance of making a fraud-proof system for transacting exchanges. This gives the blockchain enormous potential for use outside the digital currency world.

Before talking about different types of blockchains, it’s better to know the similarities that these types share. Every blockchain has a group of nodes working on a peer-to-peer network organization. All these nodes have a copy of the shared ledger in the network.

Types of Blockchains

There are 3 different major types of blockchain:

  • Public blockchain
  • Private blockchain
  • Hybrid blockchain

Public Blockchain

Public Blockchain

A public blockchain is one of the various types of this technology. It is a blockchain that allows everybody in the world to participate as users, miners, developers, or community members. It is a non-restrictive version where each peer has a copy of the ledger. This also expresses that anyone can enter the public blockchain if they have an internet connection.
Public blockchain are arranged to be completely decentralized.
The verification of the transactions is done through consensus methods such as Proof-of-Work(PoW), Proof-of-Stake(PoS), and so on.

The advantages of public blockchain:

• everybody can take part in the public blockchain.
• It creates confidence between all the community users.
• It doesn’t require intermediaries to work.
• It creates transparency to all the network, as the accessible data is achievable for verification goals.

Public blockchain has multiple uses, for example,
Governments can do voting through public blockchain employing transparency and trust. Also, companies are able to use the public blockchain to improve clarity and confidence.

Examples of public blockchain: Bitcoin, Ethereum, Litecoin, NEO

Private Blockchain

Private Blockchain

It is a private blockchain, also known as permissioned blockchain. In this type of blockchain the participant needs private blockchain, all the transactions are available just to users who are part of the network system. Private blockchains are more centralized comparing with public blockchains, but both of them offer the same set of features.
Private blockchain works in a restrictive environment like closed networks, and is great to be used at a private- held organization that needs to use it for internal use-case. By doing this thing, It can be used effectively and gives you the permission to choose just selected participants to enter the blockchain network.
Private blockchain has many advantages; they are fast because there are few participants comparing with public blockchain. This means that the network doesn’t take long time to get consensus, resulting in faster transactions.

Examples of private blockchains are: Multichain and Hyperledger projects(Fabric, Sawtooth), and Corda.

Hybrid Blockchain

Hybrid Blockchain

A Hybrid blockchain is known as a combination of a private and public blockchain. It is divided into two types, in the first type, some nodes are private, but all others are public. This means that not all the nodes are allowed to participate in the transactions.
Hybrid acts in a closed ecosystem and doesn’t need to make everything public. Rules in this type of blockchain can be changed depending on the needs.
Hybrid blockchain has different uses:
Hybrid blockchain can be used for real- estate purposes because real- estate companies can use it to activate their systems and display information to the public. Hybrid blockchain are great as well for extremely ruled markets like financial markets.

Examples of Hybrid blockchain: Dragonchain and XinFin.

In short, If you are a company and like to use it without making everything public, then, using private blockchain is a perfect idea. And, if you want more transparency to your network, in this case going for a public platform is a good choice. But they are not so suited for enterprise use cases.

What is Blockchain Technology UsedFor?

Now that we know what is a blockchain and have discussed all the types of them, we like to figure out the reason for our need to blockchains.

Money transfer and payment processing

Probably the most perfect and practical use of blockchain technology is to quicken funds transfer from one group to another. For example, companies like Bitpesa are activating businesses in places with weak banking services to transfer funds easily across borders. Almost all transactions conducted through blockchain can be fixed in very short time, whereas banks take 24 hours a day or sometimes one week.

implementation in blockchains

Blockchains have various use cases and benefits to its implementation. The most famous being value transfer over the Bitcoin protocol. For cryptocurrencies like Bitcoin, blockchain solves a very distinct issue that had hampered past work at expanding a digital currency. That problem is known also as a “double spend” phenomenon. All of us know that the normal way that we share things in the digital world is to make a copy of what we have, like a PDF or image, and sending that to others.
As you see, if this PDF were a dollar, both the sender and recipient would have identical copies of this dollar and possibly could both use it.
In addition, blockchain technology solved this issue by ensuring the recipient knows that only they have the dollar and the sender knows that they no longer have it.
Another thing is that anyone who tries to spend the dollar knows that only the next recipient now has the dollar.

Banks use private

Blockchains to tokenize their own internal assets because this permits them to transfer funds internally and in this way, they will save millions of dollars in costs.

Supply Chains Monitoring

When it comes to monitoring supply chains, blockchain technology is easy
to use. By removing paper-based contests, actions can recognize weaknesses in their supply chains quickly, in addition to find items in real-time. Blockchain can also allow actions, and buyers as well, to know how products carry out from a quality-control point of view as they go from their main place to the retailer.

Easy transfer of real estate

One of the most important goal of blockchain is to remove papers because paper actions make great confusions. When buying or selling houses, lands or cars, they have to transfer or get a title. Another way to perform these operations on papers, It supports storing titles on its network. This allows a clear perspective of this transfer and also shows an obvious view of legal purchasing.

Digital voting

Blockchain enables digital voting, and it is clear enough that any regulator can see if anything on the network has changed. It joins digital voting with the immutability, for example; immutable nature of the blockchain so that votes can be truly counted.

Food safety

Another attractive application of this technology is the ability to track food from source to plate. Because blockchain data is immutable, it is possible to track the transfer of food products from the source to the supermarket.

About Nicolle

She is an Indian Freelance writer. She loves thinking, learning, and writing about all things Web3.

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