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What is blockchain technology?

Blockchain is a decentralized ledger system (also known as distributed ledger technology) that stores records. A bank, for example, can store data (such as payment transactions) on its internal computers, but blockchain technology allows for the construction of an immutable public ledger that is open to all users. Because blockchain ledgers cannot be edited retrospectively and may be used anonymously to safeguard users' privacy, they are an extremely secure way of storing data.





It's important to note that blockchain and cryptocurrency are not the same thing. Blockchain is the technology that underpins cryptocurrencies, although it has a wide range of uses that are unrelated to Bitcoin (CRYPTO: BTC) or other digital currencies.

Consider bitcoins to be a car, and blockchain to be the engine. A motor is required to power a car, but it can also be used for a variety of other purposes. Blockchain has ramifications in the following areas, to name a few:

·                     Digital identifiers

·                     Loyalty and reward schemes

·                     Copyright protection is important.

·                     Voting using the internet

·                     Transfers of real estate

·                     Wills and medical records

Blockchain technology could be adopted and used in a variety of other fields, including healthcare, insurance, supply chain, IoT, and so on. It was meant to work as a distributed ledger (on decentralized systems), but it can also be used on centralized systems to ensure data integrity or save operational costs.

 

How does blockchain work?

1.                  Each transaction is logged as a "block" of data as it occurs.

These transactions depict the movement of a tangible (a product) or intangible asset (intellectual). The data block can store any information you want, including who, what, when, where, how much, and even the state of a shipment, such as a temperature.

2.                   Each block is linked to the ones that came before it and those that came after it.

As asset transfers from one location to another or ownership changes hands, these blocks form a data chain. The blocks validate the exact timing and sequence of transactions, and they are securely linked together to prevent any block from being changed or inserted between two other blocks.

3.                   In an irreversible chain, transactions are blocked together: a distributed ledger technology

Each successive block reinforces the prior block's verification, and hence the entire blockchain. The blockchain becomes tamper-evident as a result, giving the key strength of immutability. This eliminates the risk of tampering by a hostile actor and creates a trusted record of transactions for you and other network users.

 

 

Types of blockchain networks

There are four types of blockchain structures:

1.                  Public Blockchains

Public blockchains are permissionless and entirely decentralized, allowing anybody to participate. All nodes of the blockchain have equal rights to access the network, create new blocks of data, and validate blocks of data in public blockchains.

 

2.                  Private (or Managed) Blockchains

Private blockchains, also known as managed blockchains, are permissioned blockchains that are administered by a single entity. The central authority in a private blockchain decides who can be a node. In addition, the central authority does not always grant each node identical rights to execute functions. Because public access to private blockchains is restricted, they are only partially decentralized. Ripple, a business-to-business virtual currency exchange network, and Hyperledger, an umbrella project for open-source blockchain applications, are two instances of private blockchains.

 

3.                  Consortium Blockchains

Consortium blockchains, unlike private blockchains, are permissioned blockchains administered by a consortium of organizations rather than a single institution. As a result, consortium blockchains have more decentralization than private blockchains, resulting in increased security. However, forming consortiums can be a difficult process because it necessitates collaboration among a number of firms, which poses logistical obstacles as well as the risk of antitrust violations (which we will examine in an upcoming article). Furthermore, some supply chain members may lack the necessary technology or infrastructure to adopt blockchain technologies, and those who do may decide that the upfront costs of digitizing their data and connecting to other supply chain members are too high a price to pay.

 

4.                  Hybrid blockchains

Hybrid blockchains are those that are managed by a single entity but have some oversight from the public blockchain, which is necessary to conduct certain transaction validations. IBM Food Trust is an example of a hybrid blockchain, which was created to improve efficiency across the whole food supply chain. In a subsequent piece in this series, we'll go through IBM Food Trust in further depth.

  

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