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If you are closely related to banking and finance, then you might have come across a word blockchain in the recent decade. Most of the folks get confused with its functioning when they try to take out a literal meaning out of the name blockchain, but here the name block refers to the digital data and the chain refers to the storage of information in public database. In finance terms it is decentralized, distributed, public ledger. These complex words make the technology intricate for common folks but it can be simply explained with the help of an example of Google document. When you create a Google document you don’t copy or transfer the information, instead keep it decentralized and distributed so allowed folks can access it from anywhere.
Likely, blockchain is a piece of digital information with three distinguished parts which includes:
- Information about the transactions made, like amount in dollar, date, time
- Along with your transaction details, blockchain also keep a record of all other participants involved in that transaction
- Block store information (every transaction made on digital media has distinguished block store)
Working of blockchain:
To understand the working of blockchain, you need to understand its concepts. It comprises three basic elements, blocks, nodes, and miners. To understand these elements continue reading:
Block again is separated into three different parts. One is data which has to be stored, second is the nonce which is a 32 bit number and is generated every time you create a block. Generation of nonce then calls for the hash generation which is a 256 bit number and starts with huge number of zeros.
Whenever a block is created, it stores a data with a generation of nonce and hash which gets binded forever till it is mined.
Mining is a process of generating a new block on the chain and it has to undergo a complex procedure as it needs to find a unique nonce and hash combination that fits the chain. A single change in a block follows a mining in entire chain to keep the current block uninterrupted and distinguished from others.
Blockchain is completely based on the decentralization of data and there node plays an important role. The blocks created in the miners are decentralized with the help of nodes in the network which can be any kind of electronic device.
Challenges faced by blockchain technology
Blockchain is one of the latest technologies emerging out as a boon for various trading and finance companies. This technology is summarized as a digital ledger of online transactions decentralized to open its access to everyone using this platform with a 0% change of forgery or theft. With the explosion of this latest technology a big transformation has been seen in the finance industry and it has come up with great advancements and benefits and also has changed the way of online transactions. Every coin has two sides, at one side where blockchain is making trading easier and secure, on the other hand it is also facing challenges in its way of development. There are several benefits offered by blockchain technology, but before stepping into this sector it is important to know the possibilities of challenges this industry is facing now or may face in future.
Few challenges faced by the blockchain industry are listed below:
Blockchain completely works digitally and it has no such manual involvement directly, hence a robust technical background is required to run blockchain smoothly. Major issues faced by this technology are difficult integration with legacy system, lack of interoperability; it is not scalable, higher stage of complexities, and also in-depth knowledge of this technology to run it smoothly. To run as an organization with the best blockchain measures you need to first overcome all the above listed flaws.
Blockchain and crypto currencies emerged simultaneously in the finance sector and blockchain attain success rather crypto currencies were a victim of several forgeries. Most of the folks have a great confusion between both the platforms even most people take these two aspects as a single one and hence blockchain has ever been suspected for the theft and forgery even after have the most robust security systems and technologies used as an infrastructure.
Uses of blockchain technology in the real world
In recent days, blockchain is one of the most common terms we listen in the finance and trading sector is blockchain, and also folks are aware of its basic definition i.e. a decentralized digital ledger with complete information of transactions done on this platform. But apart from this basic definition, there is lot more to know about blockchain technology. Now most of the folks interested in finance and trading are techies and well familiar with the frequent technology growth, still use of blockchain is rarely a handful of folks all across the world and the reason behind this is lack of proper knowledge about the benefits and uses of blockchain technology. If you are new to this technological sector and willing to know more about it before you step into it then you are on the right page. Here we will discuss some major uses of blockchain which is really being a reason of finance and trading transformations.
Uses of blockchain technologies:
Money transfers and payment processing:
Blockchain is configured using latest and high-end technologies which make the money transactions really swift. Most folks use different types of money transaction platforms but late processing stuck their work for a while and this issue has been noticed by every second folk using money transaction applications. This issue is solved by blockchain technology which makes the procedure execution just a matter of seconds.
Retail sector is one of the widest sectors with various business vertexes. Blockchain technology can also be used to enhance the user’s experience in retail. Customers paying using this technology can be awarded with reward points and storing them in their successive blockchains allowing the customer to transact it again to any retail shop or a particular retail store for as a money benefit.
Paperless record storing:
Basic intention of blockchain is to make the transactions easier and paperless too. With the use of blockchain technology, folks can transfer the currency and can store the data till immortal time with great security. Data store in blockchain is in a form of log file, interconnected to each other which makes hacking or forgery impossible making this platform a theft free currency transacting platform.
Topic of interest in blockchain technology
Bockchain technology is gaining popularity in recent years and is able to attain attention of techies. It can be defined as a digital ledger having details of every single transaction. This digital ledger is decentralized to allow access to every registered candidate and also allowing them to transmit, edit and store the details of the transactions. The blockchain technology is being used in various industries such as, fintech, real estate, manufacturing, medicine and health, travelling, and more. The blockchain industry is followed by a number of principles and also the number of advantages offered by this industry is countless. Blockchain is the most robust platform when counted on the security point of view.
Here are few more interesting topics about blockchain gaining attention these days:
Cyber-attacks on blockchain:
Being an open digital ledger, blockchain is always being questioned about its security. The answer is its strongest and inherent structure that uses per-to-peer networking of blocks to store the details of transaction. The structure of blockchain infrastructure consists of digital log files linked with each other. Each transaction made on blockchain network is locked cryptographically with the prior one to ensure the robustness of the security. Once a block is added to the file log then alteration of a single block will alter data of every single block which makes the blockchain theft free.
Economic impact on crypto currency:
Blockchain provides an easy access to the financial and capital services and hence boost up the economic growth of different countries either it is fully developed or a developing one. The properties of crypto currency authorize it to have a control over money flow and other properties like gold. This makes crypto currency potent enough to impact the world economy. Also bitcoins are a digital form of currency without any physical existence like cash; this makes it accessible anytime anywhere from any device connected with the internet.