Blockchain defined:
A blockchain is a distributed ledger with a growing list of records (blocks) that are securely linked together via cryptographic hashes. Each block contains a hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree, where data nodes are represented by levels).
Blockchain is typically managed by a peer-to-peer (P2P) computer network for use as a public distributed ledger, where nodes collectively adhere to a consensus algorithm protocol to add and validate new transaction blocks. Although blockchain records are not unalterable, since blockchain forks are possible, blockchain may be considered secure by design and exemplify a distributed computer system with high Byzantine fault tolerance.
Why Blockchain is important:
Business runs on information. The faster it's received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared, and completely transparent information stored on an immutable ledger that can be accessed only by authorized network members. A blockchain network can track orders, payments, accounts, production, etc. And become a member and share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities.
Elements of a Blockchain:
✸ Distributed ledger technology:
All network participants have access to the distributed ledger and its immutable record of transactions. with this shared ledger, transactions are recorded only once, eliminating the duplication of effort that's typical of traditional business networks.
✸ Peer-to-Peer Network - P2P :
A Peer to Peer network (P2P) is a decentralized model of communication between many participants also known as peer nodes without any central servers or dependence on any other nodes, A P2P network allows each party to act as both a client and a server. After the network is formed, all participants own a copy of the ledger. From there it can be used to share and store files without the help of an intermediary.
✸ Consensus mechanism:
The consensus mechanism prescribes sets of rules so that nodes participating in the peer-to-peer network can work in sync and agree on which transactions are legitimate and able to be added to the blockchain. The consumer mechanism is used to determine the actual state of the blockchain.
✸ Cryptography:
The component ensures the security, integrity, and verification of the information in the ledger or the data transmitted between the nodes. By building on a foundation of mathematics along with knowledge of game theory, cryptography has come up with encryption methods that are impossible to break.
How blockchain work:
✸ As each transaction occurs, it is recorded as a "block" of data
Those transactions show the movement of an asset that can be tangible or intangible. The data block can record the information of your choice: who, what, when, where, how much, and even the condition - such as the temperature of a food shipment.
✸ Transactions are blocked together in an irreversible chain: a blockchain
Each additional block strengthens the verification of the previous block and hence the entire blockchain. This renders the blockchain tamper-evident, delivering the key strength of immutability. This removes the possibility of tampering by a malicious actor and builds a ledger of transactions you and other network members can trust.
✸ Each block is connected to the ones before and after it
These blocks form a chain of data as an asset moves from place to place or ownership changes hands. The blocks confirm the exact time and sequence of transactions, and the blocks are altered or block being inserted between two existing blocks.
Pros and Cons of Blockchain:
For all of its complexity, blockchain's potential as a decentralized form of record-keeping is almost without limit. From greater user privacy and heightened security to lower processing fees and fewer errors, blockchain technology may very well see applications beyond those outlined above. But there are also some disadvantages.
✸ Pros:
- Cost reduction by eliminating third-party verification.
- Transactions are secure, private, and efficient.
- transparent technology.
- Improved accuracy by removing human involvement in the verification process.
- Decentralization makes it harder to tamper with.
✸ Cons:
- Data storage limitation.
- Regulation varies by jurisdiction and remains uncertain.
- Low transactions per second.
- Significant technology cost associated with mining bitcoin.
- History of use in illicit activities, such as no the dark web.
Blockchain security:
Risk management system for the blockchain network.
When building an enterprise blockchain application, it's important to have a comprehensive security strategy that uses cybersecurity frameworks, assurance services, and best practices to reduce risk against attacks and fraud.
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