What Blockchain Exactly Is? Types/Uses/Drawbacks

Blockchain refers to digital ledgers or records of transactions, that all users can read on a network.There is no alteration possible. Blockchain is designed to store and share data. Blocks store the records of valid network transactions.

Mining

A blockchain authenticates a request for a transaction. To ensure that all nodes (participants) receive the transaction, a ‘block’ is constructed. It then competes for validation using complicated methods. After validation, the block is put to the chain. Mining is the process of competing to authenticate and complete a block.

Hashtag

The transaction is completed after the network update. This game-changing technology secures transactions using a cryptographic process called hashing.
Hashing creates a string of characters (called a “hash”) from any data. I each block, we see the previous block. The chain breaks if someone tampers with a block or inserts a bogus block. mining” a hash and adding a block to the ledger helps in earning the tokens, such as Bitcoin, are earned by “.

Blockchain types

There are four basic blockchain types:

Public blockchains

These are permissionless blockchains that anyone can join. Due to its decentralized nature, every member has equal access to a public chain. Public blockchains power currencies like Bitcoin, Ethereum, and Litecoin.

Private blockchains

Because a single entity controls and manages this type of chain, a central authority can decide who can access the nodes. Private chains include Ripple and Hyperledger.

Hybrid blockchains

The public blockchain oversees the private blockchain, which performs certain transaction validations. These blockchains’ private and permission-based access allows the central organization to regulate data access. IBM Food Trust uses a hybrid blockchain-based solution to improve efficiency throughout the food supply chain.

Consortium blockchains

A collection of organizations control Consortium blockchains. These technologies are more decentralized but require numerous groups to work together to set up and maintain.

Blockchain uses

This is a revolutionary technology poised to disrupt practically every industry. The blockchain is a distributed ledger system. We can see its usage in many different fields, including:

Healthcare

Traditionally, we have manual records of patients’ medical records. It is, however. more,  difficult to segregate patient data from personal information. Blockchain can change the way of recording and managing patients’ health records. Furthermore, it makes it easy to the accessing and sharing of information. This game-changing technology may allow sharing patient records without compromising privacy.

Banking

Blockchain technology can significantly help banks and NBFCs improve their payment clearing and credit information systems. It can also improve online banking security. Banks may use blockchain to connect payment methods with smart contracts, allowing them to track several data points per transaction.
These data points would help banks track loans, track transactions, and handle invoicing and financing.

Currency

Cryptocurrencies are a viable alternative to traditional banking for those who don’t have access to banks. It is an \\alternative of currencies from traditional monetary systems. For example, the hyperinflation in Venezuela in 2016 led to a sharp devaluation of the bolivar. Desperate to avoid US-led sanctions and acquire funds to pay off its debts, the government introduced a digital token named Petro. In 2020, the Venezuelan government temporarily disabled the Petro ledger. However, a true blockchain ledger cannot turn off for maintenance purposes.

Virtual world/ new technologies

You may already use cryptocurrencies to acquire virtual real estate in metaverses like Decentraland, Sandbox, etc., as well as artwork, memes, films, images, etc. as non-fungible tokens (NFTs). Similar to cryptocurrencies, the trading of these digital assets is possible on an internet marketplace for real money.

Also, these activities motivate people to join virtual worlds, spurring AR and VR research. For example, in 2019, the valuation of the VR industry was at roughly $15 billion, currently, it grew exponentially to over $70 billion in the next several years.

Real estate Purposes

Users can upload and manage property records on decentralized blockchain networks, and then utilize Smart contracts to buy and sell properties. State legislation is increasingly allowing smart contracts, with Arizona allowing smart contracts for property sales in 2017.
Subsequently, these are merely a few of the many industries that blockchain has the potential to disrupt.

Blockchain’s drawbacks

Although blockchain is a game-changing technology,  however, it has many drawbacks practically in every industry in the world.

The transaction rate is low.

The transaction approval time on a blockchain ledger is considerably slower than standard digital transaction techniques. Significantly, this game-changing technology relies on hash verification over a large network, thus the transaction rate is low. The Bitcoin blockchain, for example, handles only 4.6 transactions per second, compared to Visa’s remarkable 1700 transactions per second rate.

We see a delay in the transactions on a blockchain-based system due to the extra benefit of security and node-by-node verification.

Costly energy

For the hashing and other peer-to-peer computer operations through which transactions are confirmed and verified, several computers and the blockchain mining centers suck electricity from power grids. Therefore vast quantities of energy are necessary to support the blockchain architecture. This also has a significant carbon footprint, which is bad for the environment.

Asset depreciation

Likewise a bank, this technology allows you to reset your password and lacks a central authority. As a result, if a user loses his or her unique digital ID, password, or key, they will lose access to their assets indefinitely. Furthermore, there are some examples of buyers discovering their pricey NFTs have vanished from their crypto wallets. This is a result of a failure to comply with the terms and conditions of the online marketplace.  On the other hand, there was no compensation for users in these circumstances for their losses.

This game-changing technology of blocks is currently a major disruptor in a variety of industries. These industries explicitly include finance and healthcare. There’s no denying that decentralized technology can change the way we live. Surprisingly, it has already begun to do so in several locations, particularly on the internet.

Many experts however believe that the decentralization of digital services is spawning Web 3.0, a new internet. However, there are still many obstacles to overcome before we can all live in a world powered by blockchain technology.

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