Blockchain Technology
Blockchains
Blockchain is an innovative distributed/ decentralised ledger technology that was first introduced in the design and
development of cryptocurrency, Bitcoin in 2009 by Satoshi Nakamoto.
It uses a unique data structure where verification data related to the transactional records is cryptographically
secured against tampering and stored in blocks.
It offers a singular combination of permanent and tamper-evident record keeping, real-time transaction
transparency and auditability.
An exact copy of the blockchain is available to each of the multiple computers or users who are joined together in a
network.
How does it operate?
The technology allows transactions to be simultaneously anonymous and secure, peer-to-peer, instant and
frictionless.
It does this by distributing trust from powerful intermediaries to a large global network, which through mass
collaboration, clever code and cryptography, enables a tamper-proof public ledger of every transaction tha
happened on the network.
completed, goes into the blockchain as permanent database.
Each time a block gets completed; a new block is generated. Blocks are linked to each other (like a chain) in proper
linear, chronological order with every block containing a hash of the previous block.
Blockchain in Social sectors:
Agriculture: First of all, it can reduce contamination and food fraud. This can happen with the help of blockchain
tracking, collecting and managing data in the best possible way. With blockchain, farmers and distributors are
going to get their payments faster than ever-improving their ability to work on their next set of projects faster.
Health: The health sector is one of those sectors that have tons of initiatives by both for-profit and nonprofit
organizations. With blockchain, healthcare can improve digital healthcare records. It also improves pharmaceutical
supply chain management. As usual, blockchain offers a decentralized, efficient and secure solution.
Personal Identification: Governments manage vast amounts of personal data from birth and death records to
marriage certificates, passports and census data. Blockchain technology offers a streamlined solution for managing
all of it securely.
Fight corruption: Registering government transactions in the blockchain helps create a trusted history for any
transaction and significantly eases the auditing process. This would contribute to making public procurement more
transparent
Cut red tapism: As government agencies currently store data in autonomous centralized databases, they tend not
to interoperate in an optimal way. This results in duplication, overlap and contradiction in the information held.
Blockchain eliminates this lack of interoperability which generates unnecessary red tape in obtaining relevant
information from a user, and makes the process for sharing data between agencies clear and inexpensive.
Philanthropy and Aid: Billions of dollars are invested in helping the needy. However, these aids are mostly misused
due to a lack of transparency. In fact, most of the aid never reaches the intended people. This has also led people
to not contribute to these non-profit organizations. Blockchain can solve all of these problems and help elevate the
confidence in non-profit in utilizing the funds.
Crowdfunding: As with traditional crowdfunding, a blockchain powered crowdfunding campaign seeks to secure
investment for a new project from an interested community. But in this instance, funding is most likely to come in
the form of bitcoin or other cryptocurrencies.
Identity and Land rights: The World Identity Network and Humanized Internet project can store identifiers such as
birth certificates and university degrees on a blockchain, in the form of distributed digital lockboxes. Users can
keep their information private and secure, but also give permission for anyone to access it anywhere in the world.
Several governments, including those in Dubai, Estonia, Georgia, and Sweden are making early forays into
blockchain-based approaches to securing property rights.
Governance and democracy: Government and civil society can also leverage blockchain technology to strengthen
democratic processes and participation. Blockchain systems such as Ballot Chain can manage online elections with
secure and anonymous voting that participants can verify at any time.
Environmental protection: In the environmental arena, new blockchain-supported supply chain management
systems, which are transparent but cannot be tampered with, can track products from the farm to the table, and
show whether or not a food product is organic or Fair Trade.
Advantages of Blockchain Technology
Greater Trust
As a member of a members-only network using blockchain, you can be confident that you are receiving accurate
and timely data, and that your confidential blockchain records will be shared only with network members to whom
you have specifically granted access.
Greater Security
All network members must agree on data accuracy, and all validated transactions are immutable because they are
permanently recorded. A transaction cannot be deleted by anyone, not even the system administrator.
Efficient Transactions
Time-consuming record reconciliations are eliminated with a distributed ledger shared among network members
A set of rules, known as a smart contract, can also be stored on the blockchain and executed automatically to
speed up transactions.
Accuracy of the Chain
Thousands of computers and devices on the blockchain network approve transactions. This eliminates almost all
people from the verification process, resulting in less human error and a more accurate record of data.
Even if a computer on the network made a computational error, it would only affect one copy of the blockchain
and would not be accepted by the rest of the network.
Cost Reductions
Blockchain eliminates the need for third-party verification, as well as the costs associated with it.
Businesses, for example, pay a small fee to accept credit card payments because banks and payment-processing
companies must process those transactions.
Bitcoin, on the other hand, lacks a centralised authority and has low transaction fees.
Decentralization
Blockchain does not keep any of its data in a centralised location. Rather, the blockchain is replicated and
distributed across a network of computers.
Every computer on the network updates its blockchain whenever a new block is added to the blockchain.
Blockchain becomes more difficult to tamper with by disseminating that information across a network rather than
storing it in a single central database.
Faster Auditing
Enterprises must be able to generate, exchange, archive, and reconstruct electronic transactions in a secure and
auditable manner.
Because blockchain records are chronologically immutable, all records are always ordered by time. This data
transparency speeds up audit processing significantly.
Universal Banking
Perhaps the most significant aspect of blockchain and cryptocurrency is the ability to be used by anyone,
regardless of ethnicity, gender, location, or cultural background.
Globally, 2 billion people do not have a bank account. Because anyone can use the blockchain to store money, it's
an excellent way to bank the unbanked and protect against the theft that can occur when cash is kept in physical
locations.
Disadvantages of Blockchain Technology
Technology Cost
Bitcoin mining utilises a network of high-speed computers that consume a significant amount of energy.
According to the University of Cambridge Electricity Consumption Index, if Bitcoin's proof-of-work system were a
country, it would be the 34th largest consumer of electricity, trailing Pakistan but ahead of Kazakhstan.
Private Key Issue
Individual private keys are used to create blockchain addresses. That is, each person with authorised access has his
or her own private key with which to carry out their operations.
The field of cryptography is concerned with public-key blockchain processes.
This public key address is shared with individuals, who access it using their private keys, as previously stated.
If the individual misplaces their private key, the process fails. They have no control over their money or future
transaction procedures.
Scalability Issue
The Bitcoin blockchain can handle approximately seven new transactions per second.
Visa, on the other hand, claims to be able to process 24,000 transactions per second. This creates a scalability issue
for the Bitcoin system.
Highly Volatile
In 2021, the popularity of cryptocurrency skyrocketed, with Bitcoin reaching a record spot price of nearly $65,000.
However, by 2022, the price of Bitcoin and many other cryptocurrencies had fallen by more than half.
Illegal Activity
Criminal enterprises use cryptocurrencies such as Bitcoin as payment because of the privacy it provides, as well as
to target Bitcoin holders for scams.
Customers of Silk Road, a black-market online shopping network for illegal drugs and other illicit services that was
shut down by the FBI in 2013, for example, used Bitcoin.
Meanwhile, Bitcoin investment scams have increased in tandem with the currency's recent historic rise.
Crypto Use is Niche
Many exchanges, brokerages, and payment apps now sell Bitcoin, and many companies accept Bitcoin as payment,
including PayPal and Microsoft, however, payment with Bitcoin remains the exception rather than the rule.
Furthermore, selling Bitcoin for cash app purchases such as PayPal requires users to pay capital gains taxes on the
Bitcoin sold, in addition to any state and local taxes paid on the product or service.
Conclusion
With many practical applications for the technology already in place and being researched, blockchain is finally making
a name for itself, thanks in large part to Bitcoin and cryptocurrency. As a buzzword on the lips of every investor in the
country, blockchain has the potential to make business and government operations more accurate, efficient, secure,
and cost-effective by eliminating middlemen.
