Many people have confusion between blockchain technology and cryptocurrencies and they believe that blockchain and cryptocurrency are the same things. Well, the answer is no, Blockchain technology and cryptocurrency are two different things.
In other words, cryptocurrencies are the applications of blockchain. Let’s dive deep into the history and learn more about Blockchain technology and its application, and how they are different from the cryptocurrencies.
The Inception of Blockchain technology and cryptocurrencies.
Back in 2008, when the whole world was going through a recession, and several citizens lost their jobs and went unemployed. a person or group of people named Satoshi Nakamoto came up with his white paper.
And he talked about the first cryptocurrency backed by the blockchain technology i.e. bitcoin. The title of the paper was, Bitcoin:
A peer to peer electronic cash system, as the same suggests, it talks about the cryptocurrency bitcoin and revolutionary electronic cash system. But how is it different from the current financial system and fiat currencies?
What are bitcoin and other cryptocurrencies?
Unlike all other fiat currencies, like dollars, IND rupees, and many more, it is not available in the physical form and its value is not based on any reserve. It is a digital currency, stored in the form of a mathematical formula.
And if you want to make any transaction, you can simply do with the virtual wallet. If you want to know more about bitcoin, check out this link. If you and your friend own bitcoin, and you want to do a transaction, you can join the public blockchain of bitcoin and do the transaction.
Bitcoin and other cryptocurrencies are backed by blockchain technology. All the cryptocurrencies networks are based on blockchain. So what exactly is blockchain technology?
As the paper, by Satoshi Nakamoto’s name says, a peer to peer electronic cash system, here it refers to blockchain technology. Satoshi Nakamoto proposed blockchain technology in the paper.
What is Blockchain technology?
Before we get into the technical definition of blockchain technology, let us understand with a basic example. Suppose you are reading a book, in which there are several pages and content on each page.
Now consider those content to be a set of transactions, pages to be blocks, and books to be blockchain.
Like in the book all the pages are in the sequential order, similarly, all the blocks are time-stamped and linked with each other. and these blocks make the blockchain.
Blockchain technology is a distributed ledger managed by a decentralized network that stores the transactions in the immutable.
It means that there is no central authority that manages the transactions, unlike banks, any data once stored in the blockchain cannot be changed.
In a blockchain network, everyone has a copy of the blockchain and it gets updated for everyone at the same time. Hence it is a distributed ledger system.
So, the three main pillars of blockchain are the following.
so, as earlier mentioned, all the data in the form of transactions stored in the blockchain are immutable. As the transactions stored in blockchain are hashed using several cryptographic methods.
All these transactions store in the block and each block links with the next block using the hash of the adjacent previous block.
So if any hacker tries to change the transactions in any block, it would need to change the hash of all blocks in order to match. If in case any data stored in block is changed the block hash, then the next block hash would not match with one, that was before making the change. Since in blockchain, hash of block is created by combining the hash of previous block and hash of transactions stored in block.
all the data stored in Blockchain is genuine, so in a blockchain network there are several nodes, who validate the transaction on solving the cryptographic puzzle also known as proof of work. It takes lots of computational power to validate transactions in a blockchain network. In order to verify transactions in blockchain, the nodes need to find the nonce in order to get a specific number of zeros in the hash of the transaction.
A cryptographic hash of each transaction is stored in a data structure called a Merkle tree. It is a kind of tree where each node consists of the hash of the transaction and the root node contains the hash. And the root node hash is the combination of hash of each transaction stored in the tree. Hence it is very difficult to perform a malicious activity in the blockchain.
Blockchain network consists of several nodes, where each node is interconnects with each other. Every node in blockchain technology has similar authority and is at the same level as all other nodes. There is no central authority in the blockchain network, and nodes verify each transaction by solving computational puzzles.
Since, now we have discussed blockchain technology and cryptocurrency, you might get the difference between the cryptocurrencies and blockchain technology. Blockchain technology is the underlying technology for cryptocurrencies. Hence, Satoshi Nakamoto named white paper A bitcoin: A peer to peer electronic cash system.
Does blockchain technology have a future?
The idea behind blockchain technology is quite commendable. If you follow several news websites and much more, you must know that blockchain technology is advantageous in many industries. Today, the scope of blockchain technology is limitless, several industries like supply chain, education, healthcare, multimedia industry, music and art industry and many more.
Blockchain technology has revolutionized several industries and has changed the whole way of storing data. You name any industry, which needs to follow data integrity, privacy, immutability, blockchain achieves it all.
Blockchain In the supply chain.
Let us discuss in brief how blockchain technology is solving issues of data privacy, data integrity and data immutability. So for example in the supply chain, from manufacturer to the receiver involves several authorities are It makes it difficult for the receiver to know if the product is genuine and is the same as what the manufacturer sent.
Blockchain helps buyers to track information about the good if stored in blockchain. A supplier can feed all the details of the product and all details stores in a blockchain. Receiver gets access to all such information for verification. Such details can be useful for the receiver or buyer to validate the authenticity of the product.
Blockchain in the education industry.
Everyone goes to school and colleges, and few students are not able to make it and fail. In order to move ahead and continue further studies, several students try to produce forged certificates. It is really next to impossible for institutions to identify forged certificates.
Another example is you can easily show any certification, but the validation of that is difficult. Blockchain in education prevents such forgery and malicious activities. Several colleges, schools and industries, can build a blockchain network, in which they can directly share the certificates, and others can validate with comparing the hash.
Blockchain technology in Healthcare
Blockchain technology in healthcare plays an important role to secure all the medical data of the patients. As you know, in the dark web many times the hackers sell data of patients for wrong purposes.
Such data is available for conducting medical research or creating wrong data for insurance claims.
Also, Blockchain technology prevents several malicious activities with the help of storing patients” data in the blockchain.
Blockchain has nodes (only hospitals and patients), and nodes have access to the data. hence Blockchain maintains data privacy and integrity.
Blockchain technology in media
As we know that our whole world is suffering from covid19. And during this time, you might have come across fake news.
A decentralized storage system is useful to store all the information about the news. Such information would contain the origin or the news, publication, and much more.
With the availability of the information, one would be able to verify the news source and authenticity.
Blockchain technology for art and music
Such art and music industry faces several issues like copyright issues and content infringement. Blockchain technology redefines the ownership of any asset of the artist.
With such information, and record available. Based on such information ownership is verified. Such all the issues of content infringement, copyright issues will reduce and ownership would be more transparent.
All the above examples are just a few, there are several industries, where you can implement blockchain technology. Several industries, startups, individuals, and researchers are working together for blockchain-based solutions.
So, people who are thinking that blockchain technology is just a hype, they could be wrong.
According to LinkedIn, blockchain technology has become the most required skill in the 21st century.
Also, there is a huge shortage of blockchain developers. And the job opportunities have seen a huge boom.
Blockchain and cryptocurrencies are two different things, where cryptocurrencies are applications of blockchain technology. Cryptocurrencies do have a bright future and a promising financial structure.
Due to its volatility in prices, several individuals underestimate. Blockchain technology is a different way to store data in a secure and immutable way.
It has open doors for itself to use for storing data collected by several mainstream industries. If you want to build a career in blockchain then it is the right time to do so.
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