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Blockchain consists of a decentralized database that stores a registry of transactions across a peer-to-peer network in the absence of a central authority such as banks, governments, institutes etc. The network of chains in a blockchain can either be public or private however in its most basic form it is regarded as a public registry which keeps track of the ownership, the type of digital asset and its transaction history. However in a more practical sense, blockchain may be regarded as an open infrastructure that stores and transfers many different types of digital currencies such as Bitcoin.
The essence of blockchain technology is its decentralised and distributed nature which means it runs on not just one but many computers provided by volunteers around the world. There is no central authority to manage the data which removes the chance of anyone manipulating the information singlehandedly. The distributed nature gives every participant a virtual copy of the transaction and its encryption which makes transaction through blockchain extremely secure, transparent and visible to every participant at all times.
Blockchain technology in effect allows creating a shared reality across non-trusting entities which makes it a perfect way of distributing sensitive information such as certificates, contracts but also real world objects and personal identifiable information and not just cryptocurrencies.
Blockchain came onto the surface with Bitcoin’s popularity and is actually the technology behind all the virtual currencies like Bitcoin as well as Ethereum. Within a very short time period after its introduction Bitcoin’s exchange rate experienced heavy fluctuation but increased in value more than fivefold over the past two years. And this is just the beginning. According to best blockchain development company the blockchain in near future may prove to be far more valuable than the currencies it supports.
As is with every new booming technology, the hype around blockchain as well is fuelled by the potential applications and implications it promises like better cost efficiencies and attractive new business models. Though blockchain has great potential to disrupt many industries including the Public Sector, Energy, Healthcare, Manufacturing and particularly Financial Services but the technology is only as valuable as it is secure.
As we all begin to explore the potential applications blockchain technology offers it is important to ensure the initial conditions set up will not cause security issues later on. Technology experts have gone deeper into scrutinising the security, scalability and sustainability of blockchain and while they do that, those who wish to invest in a blockchain should consider a series of fundamental questions before. Doing so can help to determine if there is a direct benefit in deploying a blockchain:
If you can answer all these questions with a yes then setting up a blockchain would be highly favourable to you. However if you do not mind putting someone in charge of a database then there is no point creating a decentralised system as that would only involve unnecessary work. In summary, blockchain deployment would be beneficial if there are many parties involved, you cannot risk keeping a central database system and there is a high degree of distrust involved among the parties.