Blockchain technology has taken off in the last decade. It’s responsible for the success of cryptocurrencies like Bitcoin and Ethereum. And it’s started to be incorporated into other areas too ranging from supply chain management to voting systems. But what exactly is a blockchain? This guide aims to cover the basics of blockchain technology block by block…
What is a blockchain?
Blockchains are a type of digital filing system for storing records of transactions. Unlike a regular digital ledger, they are decentralised - records of transactions are stored across multiple computers around the world. This ensures that no one entity controls the data.
They are all called ‘blockchains’ because information of each transaction is stored visually as a block in a chain. Each block has a timestamp and contains various other information that is available for anyone to view.
Due to being stored across multiple computers, blockchains provide an ultra-secure form of record keeping. It is practically impossible to tamper with these records - once each block of information is added to the chain, it is there forever. Blockchains also provide transparency by allowing anyone to view these transactions. Personal information is not stored on blockchains, making this data no use to hackers and advertisers.
Uses for blockchains
There are many different applications for blockchains. Some of the most popular uses for blockchain technology are included below:
Cryptocurrencies
The most popular use for blockchains is cryptocurrencies. Blockchains serve as a giant communal bank statement for recording each cryptocurrency transaction. Each cryptocurrency has its own blockchain for recording transactions using that particular coin. The first ever blockchain was the ‘Bitcoin blockchain’ invented by Satoshi Nakamoto, and it continues to record every Bitcoin transaction to this day.
Smart contracts
Contracts can also be stored on blockchains. The terms of agreement can be written into the code and each new amendment to a contract can be stored as a new block. This provides a clear record of every contract and amendment made between two parties. More businesses are expected to embrace blockchains for storing contracts in the future - helping to make legal agreements more transparent.
Supply chains
Blockchain technology can be used to store data of every step in a supply chain. This can make it possible for anyone to trace the journey of a product from manufacture to delivery to arrival at the customer. Mass adoption of blockchain technology by supply chains could allow for a more transparent system in which individual deliveries can be much more easily tracked with multiple parties being able to view the data.
Voting systems
Blockchain technology also has the potential to be used by voting systems around the world. A decentralised digital ledger of every vote could make for a more accurate voting system in which individual votes cannot be tampered with - once a vote is made, it is locked in as a block in the chain.
What information can you get from blockchains?
As mentioned already, blockchains are typically public, and so anyone can view them. To do this, you need to use a blockchain explorer. There are different explorers out there for different blockchains such as Arb block explorer for the Arbitrum blockchain.
Using a blockchain explorer you can:
Track ongoing orders and payments
Check previous transactions associated with specific wallet addresses
Check fees associated with individual transactions
See the amount of total crypto in circulation
Check past contract agreements prior to any new amendments
Blockchains may help to provide evidence for certain forms of fraud or theft. Stolen cryptocurrency and hacked accounts may be possible to trace. Meanwhile, when it comes to contracts, past amendments can be easily checked so that digital contracts can not be fraudulently altered.
Can you build your own blockchain?
Building your own blockchain may be necessary if you decide to launch your own cryptocurrency. It’s possible to use the source code of another blockchain to create your own. There are block chain development companies that can help do this for you. Once your blockchain is established, it will be accessible to anyone.
Private blockchains with authorised access can be created for things like internal business affairs or private cryptocurrencies, but it’s important to remember that you won’t own the data if it is truly a blockchain. If you want control over the data, another form of digital record keeping is necessary.
Conclusion
Blockchains are essentially decentralised databases that, unlike other digital records, cannot be tampered with.
They are mainly used to store information of cryptocurrency transactions - but can also be used to store smart contracts, supply chain information, votes and other types of data still yet to be explored.
Blockchains are open to the public and can be monitored for all kinds of information to ensure transparency.
It’s possible to create your own blockchain using the source code of another blockchain.
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