30 September 2021
With the development of technology, we can manage more and more of our daily tasks digitally. Nowadays, we no longer have to go to the bank to transfer money or to the shop to buy clothes. We can do these things on the internet, without leaving our house. It just takes a few clicks to complete payments online. However, sending and receiving money via a modern banking system doesn't come without challenges. The main problems that the traditional banking system experiences are problematic ways transactions due to technical glitches and security breaches. Avoiding these is now possible thanks to the invention of a revolutionary technology called the blockchain.
Blockchain technology has been gaining more and more popularity in recent years. The chances are that if you're interested in investing or cryptocurrency, you are familiar with this term. While blockchain technology was introduced together with the invention of Bitcoin as a form of peer-to-peer electronic cash, it is now used beyond financial transactions. This article will take a closer look at what blockchain technology is and how it is implemented. We will also explain what public and private blockchain network is.
Blockchain is essentially a decentralized, open ledger where data from every transaction is stored on so-called blocks, chained together through the cryptographic hash. The data stored on this ledger is duplicated and distributed across a public or private network of computers that form part of the blockchain. Thus, blockchain is sometimes referred to as DLT, which stands for a Distributed Ledger Technology. The main advantage of blockchain technology is that it makes it impossible for the information to be hacked or altered in any way since every transaction in a blockchain database is shared among all the participants.
In simple terms, blockchain is a collection of records (blocks) linked with each other (chain) and protected by cryptography. A simple analogy for understanding blockchain is Wikipedia. Wikipedia is essentially a decentralized information database where everyone can add and access information. Wikipedia is decentralized in the sense that it doesn't rely on authority. Traditional encyclopedias were written by a group of people who, by definition, had the power to include, dismiss, alter, or ignore information as they deemed fit. With the creation of Wikipedia, the public can now verify the information because everyone has access to it and can see the history of all the previous changes. This is very similar to how the blockchain works.
Blockchain technology is a safe and secure way to store financial records and data, which is mainly used in banking, investing, and cryptocurrency. However, more and more industries have started to see the benefits of implementing blockchain technology into their business.
Nowadays, industries such as agriculture, healthcare, fintech, and even education are implementing blockchain technology. For example, in agriculture, blockchain is the perfect solution to track data regarding food safety. In healthcare, blockchain technology can be used to store patients' medical data, making it impossible for data to be altered. Another industry that would immensely benefit from implementing blockchain technology is education. The education industry can use blockchain to track student records and essential data, such as attendance, grades, and exam results.
There are four types of blockchain networks: a public, private, consortium and hybrid blockchain networks.
A public blockchain network is a fully decentralized network. It is a blockchain that anyone with the internet can access. This means that anyone can become an authorized node and participate in the process of determining which data is valid and which blocks get added to the chain. With the public blockchain network, there are no restrictions when it comes to participation. A public blockchain network is mainly used for mining and exchanging cryptocurrencies.
A private blockchain network is a blockchain that is closed to the public and can only be accessed by one organization or company. In most cases, only selected members of an organization can access this blockchain. This makes the private blockchain network a perfect technology to be used for voting or managing asset ownership. However, a private blockchain is only partially decentralized, and all the nodes within that network have to follow specific rules set by the organization.
A consortium blockchain network is a semi-decentralized network that can be accessed by more than one organization.
Finally, a hybrid blockchain network is a combination between a public and a private blockchain network, implementing features from both.
A private blockchain network is an excellent solution for companies that are focusing on privacy and security concerns. Enterprises often experience many security issues since they deal with sensitive information on a daily basis. By using a private blockchain, they can avoid the risk of having this information leaked. However, since the private blockchain can only be accessed by a limited group of people, it contradicts the foundational idea of blockchain technology, which is decentralization. This creates a security concern since if an unauthorized person within the company gains access to the network, they can hack it and alter the information. Another security issue with a private blockchain network is that if one node transmits incorrect information, it will compromise the integrity of the whole network.
Blockchain is a revolutionary technology because it prevents the alteration of data and offers complete transparency. It also works on very complex algorithms, making it highly secure for every sector that uses it. In the cryptocurrency market, blockchain-based payments are becoming a more and more popular method of payment. Blockchain-based payments are a safe and secure way for processing payments with cryptocurrencies. There are many benefits to using blockchain technology to secure your financial or cryptocurrency transactions. Click here to see how the Nexthash blockchain-based payment processor can help you to integrate the option of crypto payments easily and securely directly into your business.