Blockchain Technique: The Root of Cryptocurrencies
The increased attention towards Bitcoin, a cryptocurrency, has increased the interest of concerned in the blockchain technique.
The blockchain is a chain of blocks, or a list of records, which are distributed on over the globe and connected through the cryptography. A blockchain is like Wikipedia pages, which contents may be updated by its users and it is visible to all the users. But it is much secure than Wikipedia and implements tight security features.
What is Blockchain?
According to Don & Alex Tapscott, authors of Blockchain Revolution (2016), “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”
A Blockchain is like a ledger to maintain the record of transactions among the users. All the transaction records are maintained in a coded format. It uses a hash function that generates an encoded string for a record. A change of single character in a record corresponds a totally encoded string. In the blockchain technique, the collection of these records are termed as blocks, which may be assumed like a spreadsheet, and the connection of these blocks is termed as blockchain. Each block here comprises the hash generated values of the previous transaction and a timestamp of the transaction.
The blocks are distributed globally over a network and maintain any modification in the data. All systems that store blocks across the globe are termed as nodes. Every node consists of a copy of blockchain. The distributed network of blocks maintains a voting system and a block is updated if and only if a certain number of votes authenticating the updates is received. A blockchain is updated in every ten minutes automatically.
Use of Blockchains
The blockchain technology is used nowadays for the distributed ledger of the cryptocurrencies. Bitcoin and Ethereum are the notable cryptocurrencies which use the blockchain technique.
Blockchain technique is fast and secure for financial transactions as compared to the traditional techniques.
But there is a risk of misuse is associated with this techniques. Since it does not require the identity of a person who is performing a transaction, many black-money related transactions are possible using this technique. This is the reason why the Reserve Bank of India (RBI) has imposed several regulations on it. It is expected that in the coming future, a big growth of this technique can be seen in India.