Blockchain technology (BT) is expected to revolutionize the way transactions are executed in supply chains. So, what is blockchain technology? what is the Blockchain development process?  and why is Blockchain more secure? Let’s talk about this here.

What is Blockchain Technology and How Does Blockchain Work?

Nowadays, companies have begun to adopt blockchain to improve transparency and security. Blockchain is considered by many to be a disruptive innovation and core technology. Blockchain is considered by many to be a disruptive innovation and core technology. 

What Is Blockchain Technology?

Blockchain usually refers to real-time, unalterable transaction and ownership records. Simply, the blockchain is a recording system that can record various transaction information and the ownership information of any asset in a reliable and safe manner.

This is like a database that stores information in blocks. These blocks can be copied on a personal computer. The blocks on all computers are the same and kept in sync with each other.

When someone adds or deletes data, the information in all blocks will change accordingly. Each block is as secure as your online banking portal, almost impossible to crack. 

Blockchain ledger can serve all kinds of vouchers, including loans, land deeds, logistics freight bills, and almost all valuable things.

Big data information can be shared in a multi-validation environment, which is very suitable for real-time and secure information sharing. 

History and Evolution of Blockchain Technology

A lot of people would think that Blockchain and Bitcoin are the same. In fact, the two are not the same thing. Blockchain is the underlying technology of Bitcoin.

In 2008, a person who claimed to be “Satoshi Nakamoto” released a white paper, hoping to build electronic cash system that would not spam.

In January 2009, Bitcoin was officially born, with a total cap of 21 million coins, transparent issuance rules, and there is no central issuing agency, all relying on automatic code execution. 

The code and operation of Bitcoin are maintained by those involved, and anyone in the world can participate in it.

In the beginning, Bitcoin was only circulated among computer geeks. Some people tried it as a new gadget, and some people were attracted by the utopian ideal that it would not be distributed indiscriminately and could circulate freely. 

In 2010, there was even a story of a programmer who exchanged 10,000 bitcoins for 2 pizzas. In any case, few people at the time would have thought that Bitcoin would have so much influence later on.

Over time, Bitcoin gradually spread from the circle of computer geeks. With more and more people participating, capital speculation followed one by one, and the Bitcoin price also opened a pattern of highs and lows, which sparked the attention and reports of some mainstream media and attracted more and more people to participate in Bitcoin.

After studying Bitcoin source code, people collectively refer to the underlying technology used by Bitcoin as blockchain technology, and Bitcoin is the first application of blockchain technology.

Blockchain technology can be used to create bitcoin, and it can also be used to do many other things to benefit the entire society.

How Blockchain Technology Works

As the name suggests, the blockchain is a combination of a “block” and a “chain,” which is essentially a distributed ledger. So how does this ledger maintain accounts and how does it work? Let us illustrate with an analogy.

In the beginning, one person from a group of people stood up and held a blank piece of paper for bookkeeping. The system gave the bookkeeper a certain amount of reward (for example, 50 bitcoins). 

After the bill is booked, an encryption algorithm is used to generate an anti-counterfeiting code on this page of bills, and the bills are copied to all other people at the same time. 

Next, everyone calculates a difficult problem, and the person who calculates it first can keep accounts and enjoy the rewards of the system to the bookkeepers exclusively. 

When recording the second page of the bill, you need to write the anti-counterfeiting code on the first page of the bill at the beginning, and then record the account. 

After the record is completed, an anti-counterfeiting code of the second page of the bill is also generated through an encryption algorithm, and then the bill is copied to all other people. 

Then, everyone competes for the accounting right of the third page of bills by calculating the next problem. 

This page of bills will also be marked with the anti-counterfeiting code of the previous page at the beginning. After recording, an anti-counterfeiting code will also be generated and the bill will be synchronized to others, and so on. 

This page-by-page bill is turned into a thicker general ledger through the binding line in order, and each participant has one copy.

In the above analogy, the bills of each page are called “blocks”, and the binding line is the “chain”. By binding this page of bills into a general ledger in sequence, a “blockchain” is formed. , Its essence is still a ledger. It’s just that you have a copy of this account. 

There is no central person or organization. Everyone is equal. Everyone can compete for the right to keep accounts through calculation problems. The entire account is jointly maintained by all participants.

Blockchain Transaction Process: Some person requests a transaction. The requested transaction is broadcasted to the P2P network with the help of the nodes. The network of nodes verifies the authenticity of the transaction and the status of the user with the help of well-known algorithms. Once the transaction is complete, the new block is added to the existing blockchain.

Why the Blockchain is So Secure?

Since there is no central person or organization, how can this jointly maintained ledger prevent people with bad intentions from making false accounts or tampering with the records of the ledger? 

Blockchain is encrypted, decentralized, and cross-checked, which allows the data to remain strongly backed.  The blockchain is fully loaded with nodes and hash identifiers, and it is impossible to hack most nodes at the same time.

Blockchain relies heavily on cryptography to achieve its data security. In this context, the so-called cryptographic hash functions are of fundamental importance. These hashes are used as unique identifiers for data blocks. And these hash identifiers play a major role in validating transactions and ensuring blockchain security.

Suppose that Jacob grabs the right to book the bill on page 100. His friend Thomas originally had only two thousand dollars in his account. Jacob helped him secretly change it to twenty thousand dollars, and then synchronize the account book to other people after he finished his account. 

At this time, other people will immediately find that there is a problem with this account, because the account is in his own hand, and the ins and outs of Thomas’s assets are recorded on the front account book. 

Therefore, others will refuse to add the incorrectly recorded page 100 bill to the general ledger and will select another honest person to record the 100th-page bill through a calculation problem.

Therefore, we can see that blockchain technology has these characteristics: openness and transparency, decentralization, and non-tampering.

In daily life, many people are accustomed to using SnapPay and Google Pay to pay when they consume. 

SnapPay and Google Pay act as bookkeepers. We need to trust this bookkeeper to not make mistakes or make false accounts. 

The blockchain is different. Hackers may attack and modify the ledger in a computer, but if you want to actually modify the blockchain data, you need to attack more than half of the ledger in the computer, which is very difficult, especially like Bitcoin. 

In the blockchain, there are tens of thousands of nodes that keep accounts, and the accounts are in their own hands, and they are scattered all over the world. Therefore, blockchain technology also has a very big advantage in security.

Conclusion:

Blockchain can revolutionize business processes in many industries, but its adoption is taking time and effort. However, it is expected that companies or governments will finally accept the benefits of blockchain in the near future, and start using it to improve financial and public services.

Read Here: Blockchain Technology: Advantages and Disadvantages