15 February 2022
Blockchain has become the latest buzzword in technology and is often viewed as one of the best technological advances. Without a doubt, blockchain has opened a new era of digital security. The decentralized and distributed blockchain network creates an immutable and auditable ledger that is better than any traditional database technology.
In this article, we’ll cover the definition of blockchain technology, why is blockchain secure, examples of blockchain applications, and how you can create your own blockchain-related products with the help of NextHash, a state-of-the-art blockchain platform that aims to make crypto trading more accessible.
The blockchain is a digital ledger that records transactions in a network of computers. Because the network isn't stored in one central place, it's very difficult to tamper with data.
A blockchain can be programmed to record anything of value — financial transactions, physical assets like cars and real estate, or even voting records. Blockchain is a record-keeping system where information is stored in blocks. These blocks are linked together to form a chain, hence the name "blockchain." If a single block in the chain needs to be changed, all of the blocks that come after that block need to be changed as well. This answers the question “why is blockchain secure”: it is because any changes must be carefully planned out to avoid being noticed.
The idea of a digital ledger dates back to 1991 when researchers Stuart Haber and W. Scott Stornetta described a system for "time-stamping" documents so they could not be backdated or tampered with. That concept was later refined by cryptographers Nick Szabo and Hal Finney, who suggested using cryptography to secure an immutable ledger. A decade later, in 2009, a person (or a group of people) known as Satoshi Nakamoto implemented blockchain technology to create a cryptocurrency known as Bitcoin. Throughout the history of Bitcoin, there have been numerous claims and speculation concerning the identity of Nakamoto, none of which are confirmed.
Before we explain why is blockchain secure, let’s take a look at some of the most prominent uses of this revolutionary technology:
Blockchain technology is most frequently used in financial transactions, such as cryptocurrency transactions. Cryptocurrencies are digital currencies that rely on encryption techniques to ensure secure transactions. These currencies can be transferred peer-to-peer without a central authority's approval.
Blockchain technology can be used to keep an immutable record of any type of transaction involving value, such as money, goods, or property. It can also be used to record events and keep track of sensitive information, such as votes in an election or patient records in the healthcare industry.
Smart contracts are scripts stored on blockchain networks that automatically execute tasks when certain conditions are met without human intervention. These scripts can be used for various purposes, including financial transactions and keeping records.
Blockchain technology offers the promise of security when it comes to identifying information. While identity theft and cybercrime have continued to increase, blockchain technology provides a way to secure the authenticity of personal data and eliminate fraud.
So why is blockchain secure? It is mainly because it's decentralized, meaning there's no central server or hub where all the data lives. Instead, that data is spread throughout potentially thousands of nodes on the network, each with its own copy of the entire ledger. To alter that ledger would require changing every node on the network, making it nearly impossible for hackers to steal any information or corrupt the system.
To be even more specific, blockchain is so secure thanks to the concept of proof of work. It was introduced into Bitcoin by Satoshi Nakamoto and is used to confirm transactions and create new blocks on the chain.
Proof of work, or PoW, works this way: Computers connected to the blockchain network confirm transactions by solving complex mathematical equations. The more computers you have working to solve the equations, the more secure the network becomes.
When a computer solves an equation, it adds a block to the chain. Solving equations and adding blocks is called mining, and people who do this are called miners.
When a miner mines a block, they get rewarded with cryptocurrency — Bitcoin, in this case - for their efforts. This incentivizes people to continue mining and securing the network, even if they aren't getting paid in any other way for their computing power.
While blockchain was initially developed to facilitate Bitcoin, the value of blockchain technology extends well beyond cryptocurrencies. In fact, it is used by many major companies in various applications. For example, three big names using blockchain are IBM, Microsoft, and Mastercard.
IBM has been very aggressive in its use of blockchain technology. It has joined with several major corporations, including Walmart, Nestle, and Unilever, to create an IBM Food Trust Solution that oversees the movement of food from producers to retailers' shelves. The system allows for the tracking of food safety and quality issues as well as streamlining the supply chain process between suppliers and retailers.
Microsoft has partnered with ConsenSys to develop an Ethereum-based cloud computing platform called Azure. The platform is designed to help developers create "smart contracts," which are self-executing agreements written into lines of code rather than traditional legal documents.
Mastercard is also working on a blockchain solution for businesses that would allow them to send money across borders more quickly and efficiently than current methods allow.
Blockchain technology has many potential uses in the business world. Big corporations and small businesses are starting to see the potential of this revolutionary technology, realizing why blockchain is secure and why they should be using it to improve their operations.
If you’re looking to implement blockchain technology into your business, NextHash is here to help. At NextHash, we help you create a blockchain-based solution fully tailored to your business. Get in touch with our team to explore how we can help you integrate crypto solutions into your business.