Tag: use blockchain

  • Blockchain transaction – How It Works?

    Blockchain transaction – How It Works?

    What is Blockchain Technology?
    What is a blockchain transaction, how it works, how is it useful for everyday life

    By Guy Avtalyon

    A blockchain transaction is a public record of all bitcoin transactions that have ever been executed. A block represents the current part of a blockchain. It records the recent information. When a block is completed, it becomes part of the blockchain. As a permanent database creating a new block. Blocks are connected to each other like a chain in real, consecutive order. Every following block contains a hash of the previous block. Blockchain Technology is one of the hottest and most interesting technologies in the present market.

    The first blockchain transaction

    The first transaction in the real-world took place on 22 May 2010. Laszlo Hanyecz made it. He bought two pizzas in Jacksonville, Florida for 10,000 BTC. In five days, the price grew 900%, rising from $0.008 to $0.08 for 1 bitcoin.

    From a technical point of view, the most fundamental definition of a transaction is an atomic event that is allowed by the underlying protocol.

    Speaking about bitcoin, transactions are ordinarily individual payments.

    Lena sends John 10BTC.

    If the word transaction conjures up a financial transaction in your mind, this is appropriate. The bitcoin blockchain is basically a list of all the bitcoin transactions since Bitcoin began. Bitcoin is only one of many blockchains. Not all blockchains limit their utility to payment transactions. Let’s say, transactions are payments when you think of the blockchain as a distributed ledger. The ledger that keeps a record of who owes who how much bitcoin. 

    Is the blockchain a data structure?

    No, if you consider the blockchain as a data structure then a transaction would be just one of the events that update the data store. But there is a huge difference. Before invent of blockchain you had a situation that one event was able to update only one data table on one the particular machine. With blockchain, such a single event is updating a data table on every machine connected in the chain no matter where it is on the planet.

    Blockchain Transactions are nothing special.

    It is the same as in any other database. To keep it simple, a blockchain transaction is a transaction record in a blockchain. Just like you store a record in MySQL database. It’s exactly the same.  The blockchain is a database. Transactions get stored in the form of blocks and the blocks form a chain to form the blockchain.

     

    Is blockchain transaction safe?

    Blockchain transactions are safer and more effective for most companies. And hence the demand for quality blockchain platforms which can be tapped for ensuring greater security.

    Blockchain transactions are analogous to a wire transfer or cash transaction. Payment is done directly from one party to another. All without going through another financial institution. And without any third-party oversight. Payment processing is done over a private network of computers.  Every single transaction is recorded in a blockchain, which is public.

    Say, blockchain transactions are a feature of blockchain technology’s mainstream feature – cryptocurrencies.

    Cryptocurrencies rely on the blockchain. Each block in the chain holds records. The records are the information of each and every transaction! The transaction’s information gets stored on blockchain ledgers.

    What is blockchain in essence? 

    • A distributed ledger
    • A consensus protocol
    • A membership protocol

    Blockchains transactions require consensus.
    This means the participants must agree on who’s going to extend the blockchain, and how!

    Public blockchains such as Bitcoin, Ethereum use consensus that looks like a crypto-lottery. For example, miners have proof-of-work which is crypto-puzzle and in that way get their lottery tickets. The one who wins this “game” gets the reward. The reward is permission to add one block to the blockchain and, also, such can print new money.
    All miners try to approach to the longest chain.

    This procedure is using to get consensus. It will take time, around 10 minutes. Transactions are not taken as fully confirmed for about one to two hours. After that point, they are adequate “deep” enough in the ledger.

    Introducing an opposing account of the ledger, called as a fork, would be computationally exclusive. This stoppage is a susceptibility to the system. And also an important obstacle to the use of bitcoin-based systems. It is necessary for fast-paced transactions, such as monetary trading.

    But we have to be honest, in spite of privacy-enhancing technologies such as encryption and identity management, someone can see blockchain transactions throughout network nodes. These produce metadata. So statistical analysis can reveal information even from encrypted data. As a result, it can allow for pattern recognition.

    But quite frankly, away from someone cracking the cryptology. The blockchain transaction is one of the most secure digital capabilities available.

    Advantages of blockchain transactions

    Maintaining records of transactions is an essential function of all businesses. Hence, these records have to track the past performance of the company.  And also, help with forecasting and planning for the future. And most organizations’ records take a lot of time and effort to create. That’s why the creation and storage processes are prone to errors. And these transactions have to be executed immediately. Yes, the settlement can take more time, from several hours to several days.

    On the blockchain, the process of transaction verification and is recording.  Let’s say, it is immediate and permanent. Because the ledger has distribution across several nodes. So, this provides the data to replicate and store instantaneously. On each node across the system.

    What is recording in blockchain?

    Recording in the blockchain means to note details of the transaction such as price, asset, and ownership. And also, they are verified and settled within seconds across all nodes. But, when registering the change on anyone ledger, you are registering simultaneously on all other copies of the ledger. Because each transaction is transparent.  And permanently recorded across all ledgers. It is open for anyone to see. So there is no need for third-party verification. 

    Blockchain technology will disrupt the way we write. And enforce contracts, execute transactions, and maintain records.

     

  • What is Blockchain or Blockchain Technology?

    What is Blockchain or Blockchain Technology?

    2 min read

    What is Blockchain or Blockchain Technology?

    • The blockchain is the mathematical structure for storing data in a way that is nearly impossible to fake.
    • Blockchain technology is an important element of cryptocurrencies. Without it, digital currencies like Bitcoin would not exist. 

    If you are new to blockchain technology or you are already a trader, this article is for you. So, what is the blockchain? The blockchain is an absolutely brilliant invention. The idea of a person or group of people known by the pseudonym, Satoshi Nakamoto. By the time, it has developed into something greater, but still, there is a question: What is Blockchain?

    Every day you can hear about Blockchain technology, Bitcoin, ICO, Ethereum. But do you understand what blockchain is?

    How does it work? Can blockchain be used in business? Will blockchain change the world? This article is aimed to answer all these questions.

    What blockchain is, the best explanation is through the game.

    Imagine you and your friends are on a vacation. Its night, you are sitting around the pit-fire and playing storytelling. One has begun the story with a sentence, you are repeating the sentence and adding up your part, then the other player, etc. The main goal is the chain of sentences which are producing a story. If someone is not able to repeat and add his own sentence, the chain will fall down, it would end. New sentences are nothing without the initiation of old sentences. That exactly what the blockchain is. You added a sentence on your friend sentence, that was a ‘block’. Everyone approved your phrase because it referred to the old sentences, that is a shared ledger.

    From the beginning

    Common people started mistrusting the banks. There lies the birth of blockchain. A mysterious person named Satoshi Nakamoto created a whole new currency. He built the whole system on the principle of decentralization. He created a public ledger, which is synchronizing continuously and everyone is able to witness the process.

    “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”

    These are the words of Satoshi Nakamoto, the mysterious creator of Bitcoin, in a message sent to a cryptography-focused mailing list in October 2008. Included was a link to a nine-page white paper describing a technology that some are now convinced will disrupt the financial system.

    Transform this into real life.

    Let me ask you something. What happens when you send money from your bank account to someone else’s bank account? Your bank acts as a middleman, it verifies and approves the details of sender and receiver through its ledger (a book or other collection of financial accounts. In this case, you must trust your bank to have such transaction. Imagine, when banks are collapsing, will you send your money through banks? Will you be able to trust the middleman?

    What is Blockchain or Blockchain Technology? 2

    How does Blockchain work?

    Suppose, you want to transfer some money to your friend in the other country. You will initiate a transaction, each online transaction will be a reference to ‘Block’. Because it is a public ledger, there will be broadcast to everyone in the network about the block. Constant synchronization of the ledger will be going on. If the people in the network would approve the transaction, then the ‘block’ would be added to the ‘chain’ which is a transparent record of transactions. Hence the name ‘blockchain’. This is how the money would be transferred. Satoshi Nakamoto carefully designed it to prevent the double spending of money.

    What does it mean?

    This problem exclusively belongs to digital currency. We can copy songs and movies from our laptops and paste them in other devices. That file will carry information. And can be copied and reproduced regarding our digital transaction. This will generate new fake currency, which is not part of our original monetary system. We can call it double spending of money.

    Satoshi Nakamoto handled this problem extremely well. He introduced public ledger and an immutable chain of blocks. Every transaction is bundled into a block, every block is processed, authenticated, time-stamped and linked to the previous block.

    This creates an immutable chain

    When you want to send some money from your bank account, your bank will verify and confirm the transaction. Problem is that you have only one confirmation in the banking system. But, in the blockchain, at least 6 confirmations are required for a block to be added to the chain. Contrary, it is rejected. Can you see how blockchain is more secure and transparent?

    Why use blockchain?

    Transparency is one of the reasons why should use this technology. It is about its open source structure. It means that other users of the network can read and confirm or not confirm the information. The essential thing of being open source is that it can’t save logged data without majority blockchain network users.

    Decentralization is other. Next main blockchain reason is the lack of a central data hub. Instead of running a massive data center you save your information in decentralized net, where any user can read, check and authorize any of your actions.

    User controlled networks are also advantaged, a consequence of the decentralization of the network. Instead of holding a third party for data processing, stakeholders decided to control each other and decide what to do next. For instance, the inability to achieve 80% consensus on the update, tied to the bitcoin block, lies in the fact that it was necessary to develop a plug into two separate currencies, bitcoin, and bitcoin cash.

    Faster transaction settlements is another advantage. Blockchain technology works 24 hours a day, seven days a week. That means the blockchain based transaction process is faster.

    When you send the transaction to traditional banks, it will take days to be completely settled. This is due to protocols in bank transferring software, and working time. You also have financial institutions located in various time zones, which delays processing times, but it’s not about blockchain.

    Reduced transaction costs are characteristic. Blockchain allows you to execute transactions without a third party, which is often a bank or a central server. Since the intermediary is absent, this allows you to get rid of imposing expense items.

    What is Blockchain or Blockchain Technology? 3

    Where to use the blockchain

    There are a lot of uses of blockchain technology. Bitcoin or cryptocurrencies is just one application of blockchain. We have Ethereum, which is a platform where different applications can be built, it is more like an Operating System. And other altcoins too, are based on the blockchain. And many other fields. The blockchain is not only about cryptocurrencies.

    In healthcare, the use of digital signatures based on blockchain data allows access only with the permission of several people and full compliance with keys, also allows to regulate the availability and maintain the confidentiality of medical records.

    As a protection, the blockchain technology is creating an impregnable network with the impossibility to get access from the outside. The blockchain technology can improve transparency, speed up work and check corruption in governments all around the world. Probably one of the most popular uses of blockchain technology in the modern world is energy. In order to maximize the rational use of the generated energy,  blockchain technology provides to see how much energy we use, at what hours, etc. There are lots of opportunities with blockchain technology and its immeasurable potential for improving the quality of service provision improving the confidentiality and integrity of data at the same time.

    Bottom line:

    So, what is blockchain? Maybe the best answer is this quotation: ‘The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.’ said Don & Alex Tapscott, authors Blockchain Revolution (2016).

    The blockchain technology is extremely powerful and can disrupt many existing organizations. No matter what happens with Bitcoin, Blockchain technology is here to stay, in a more refined and sophisticated manner.

    Risk Disclosure (read carefully!)