What is Blockchain?
The word “blockchain” is appearing more and more, however, many people are still unsure of what blockchain actually is and how it works. Blockchain is a linked list of transactions stored on a network of computers (nodes). They are immutable, meaning that transactions cannot be changed once committed. Finally, they are open, meaning that transactions can be viewed by anyone. There are three types of blockchain networks: public (permissionless), private, and permissioned.
A public blockchain network, also known as a permissionless blockchain, is exactly what it sounds like; it is one that anyone can join and participate in, but they tend to have long processing times due to the large transaction sizes and number of nodes. Nodes are the computers, laptops, servers or other computer devices connected to the internet. A public blockchain is not controlled by any central authority.
A private blockchain network is a decentralized peer-to-peer network, in which one authority governs the network, controlling who is allowed to participate, execute a consensus protocol and maintain the shared ledger.
Permissioned blockchain networks place restrictions on who is allowed to participate in the network and in what transactions. Participants need to obtain an invitation or permission to join.
How does it work?
Now that you understand what a blockchain is, we can break down how it works. Blockchains are what we know as distributed ledger technology (DLT), which means that the blockchain allows digital information to be recorded and distributed, but not edited. A blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed.
Blockchain can be described as a chain that is made up of individual blocks of data, hence the name “blockchain”. Each block consists of three things: a list of transactions, a hash (a long string of random characters) for the block, and the previous block’s hash (this is how the blocks are linked).
As each transaction occurs, that list of transactions is recorded as a block of data.The block can record information such as who, what, when, where, how much and the condition. Each block is then connected to the block before it, forming a chain of data.The blocks are linked together securely to prevent any blocks to be altered or to be inserted in-between two existing blocks. The transactions in each block are linked together in an irreversible chain, hence the name: blockchain. When a new block is added, it strengthens the verification of the previous block, making the entire blockchain more secure. This makes the overall transaction more trustworthy.
What is it used for?
The most common use of blockchain today is its role in cryptocurrencies. Cryptocurrencies, such as Bitcoin and Ethereum, are digital currencies or “tokens” that can be used to buy goods and/or services. Blockchain’s role in the world of cryptocurrencies allows online transactions to always be recorded and secured by acting as a public ledger and an enhanced cryptographic security system. Each cryptocurrency has its own identification number and singular owner due to blockchain security, which makes theft much harder.
Although many of us hear blockchain being associated with crypto most often, it is applicable in other ways as well. Blockchain is being used to process transactions in fiat currency, which can be verified quicker than sending money via a bank or other financial institution. Private and hybrid blockchain networks are being implemented more and more often in the supply chain sector because members of supply chains have important data privacy and competition considerations.
Why does it matter?
Blockchain has some advantages that may disrupt some industry sectors, such as supply chain, finance, healthcare, retail, and government. The role blockchain has in the supply chain is that it can improve the traceability, transparency, and tradability, which in turn will impact every other sector that relies on the supply chain. Currently, real-time tracing is unavailable and makes it difficult to track products, but blockchain technology offers transparency so that businesses can track every detail and all-time traceability that prevents fraudulent activities.
Financial institutions will be highly benefited by blockchain technology. Blockchain will help financial institutions to streamline processes, offer authenticity and economic benefits, such as better operational costs, fewer infrastructure costs, and transactional costs.
Healthcare’s setback is currently due to the lack of unity, in which patients need to carry their documents and hospitals keep records in different sectors, which can take time to retrieve when needed. Blockchain can be beneficial when used in healthcare for patient consent management, drug traceability, secure electronic health records, micropayments incentivization, and clinical trials data security.
The retail industry can benefit from blockchain technology as well; blockchain will impact the retail industry by improving inventory management, speeding up settlements, and decreasing the amount of paperwork.
Blockchain technology can be used within the government to improve government services and provide transparency for citizen rights. Blockchain technology within the government can be used in processes such as voting, digital currencies, border and customs patrol, inter-agency data management and so much more.
The Wrap Up
There are so many use cases for blockchain technology in today’s world and it is only getting started. There are plenty of resources to find that can teach you the different ins and outs of the blockchain, how to use it for your projects and what are the best tools to use.
Another way to learn more about blockchain is to join groups, discussions and attend webinars to educate yourself. Webinars are a great way to learn more and have a discussion with experts that can help guide you and answer any questions you might have. A fun way to find those webinars is to join a group - and that is where we come in!
Hack3rs Club is a place for aspiring Web3 developers to get together and learn more about developing in the Web3 space. The Hack3rs Club Discord is open for anyone to join, and the gated community is available through purchasing a Hack3rs Club NFT. The gated community will host webinars, networking events, a convention and a very large hackathon! Find out more on the Hack3rs Club website.