What is blockchain? Simply put, blockchain is like a secure and transparent digital ledger. This is the place where all transactions or activities are recorded chronologically and cannot be changed. Please learn the meaning and how blockchain works in this article.
Blockchain is one of the technologies that many people are talking about. However, the understanding of what blockchain is and how it works is still unclear. Many people only know that blockchain is the technology behind digital currencies such as Bitcoin, but do not understand its wider potential.
Therefore, in this article we will provide a simple and easy-to-understand explanation of what blockchain is. We will also discuss how it works and the various potential applications in various fields.
Contents
What Is Blockchain?
Blockchain is a technology used to create and manage a decentralized and secure digital ledger. Simply put, blockchain can be thought of as an ever-evolving and immutable ledger that records all transactions or events that occur within it.
Basically, a blockchain consists of a series of interconnected blocks. Each block contains a number of transactions or groups of data. When a new block is created, it is automatically connected to the previous block and forms a chain. This is the reason why it is called “blockchain”.
You can also think of the blockchain as a car consisting of several wagons connected in a single lane, where each wagon contains a certain amount of data. Just like passengers on a train carriage in real life, a block can only hold a certain amount of data before it is full. Each block also contains a time stamp, so it is clear when the data was recorded and stored.
The main uniqueness of blockchain lies in its decentralized nature. That is, there is no central authority that controls or has full ownership of the blockchain. On the other hand, blockchain data is stored and managed by a distributed network of computers, namely nodes.
How does blockchain work?
In the last few years, you may have noticed many businesses around the world integrating Blockchain technology. But how exactly does blockchain technology work? here is the explanation:
- Transaction: Every time a new transaction occurs, for example a cryptocurrency transfer or there is a data record, then the transaction is collected in the form of a block.
- Verification: The new transaction block must be verified by nodes in the blockchain network. Verification is done to ensure the validity of the transaction.
- Block Formation: Once verified, new transaction blocks are added to the blockchain. These blocks are then linked to previous blocks in the chain using a cryptographic link known as a hash.
- Consensus: The consensus process is used to ensure that the nodes in the network agree on the state of the blockchain. This is necessary because blockchain is a decentralized system with no central authority.
- Propagation and Synchronization: Once a new block is added to the blockchain by a node, information about the block is propagated to other nodes in the network. Each node then updates its copy so that it can maintain consistency and uniformity throughout the network.
- Security and Immutability: Because each block is linked to the previous block through a hash link, manipulating data in one block will change its hash and affect all blocks that follow it. This makes the blockchain very difficult to manipulate or change retroactively. In addition, because blockchain data is stored in many nodes in the network, attacking and manipulating all nodes simultaneously becomes very difficult to do.
Blockchain Implementation Potential in Various Industries
Now that you know what blockchain is and how it works, let’s understand some examples of implementation of the technology. Blockchain has the potential to be applied in various fields of business, ranging from financial services, retail, marketing and advertising, to healthcare. Here are some examples:
1. Remittance
The use of blockchain in cross-border remittances can be a more economical and faster alternative compared to conventional remittance services currently available.
Be aware that remittances, especially for cross-border transactions, will usually take a long time and be expensive. Even in the modern financial system in the United States, transferring money between accounts can take days, while transactions using blockchain only take a few minutes.
2. Insurance
The use of smart contracts in the blockchain can provide a higher level of transparency for customers and insurance providers. By recording all claims in the blockchain, this can prevent double claims from customers for the same incident.
In addition, the use of smart contracts can speed up the process of disbursement of payments to parties who submit claims. A smart contract itself is a digital contract stored in the blockchain that is executed automatically when the conditions and provisions that have been determined are met.
3. Real estate
Transactions in the field of real estate involve many documents to verify financial and ownership information, as well as transfer deeds and ownership rights to the new owner.
By leveraging blockchain technology, recording real estate transactions can be done in a more secure and easily accessible way, thus facilitating the process of ownership verification and transfer. This approach can speed up the transaction process, reduce the need for documents, and save costs.
4. Voting
By storing personal identity information in the blockchain, we are getting closer to the ability to vote using blockchain technology. The use of blockchain technology can ensure that no one can vote more than once, only eligible voters can vote, and the vote cannot be changed.
In addition, this can also increase the accessibility of voting by just pressing a few buttons from your smartphone. On the other hand, the use of this technology can also significantly reduce the cost of holding elections.
By storing medical records on the blockchain, doctors and medical professionals can access accurate and up-to-date information about their patients. This can ensure that patients who consult with various doctors receive the best appropriate treatment.
In addition, the use of blockchain can also speed up the process of obtaining medical records, thus enabling the provision of timely treatment. Storing insurance information in the database also allows doctors to easily verify the patient’s insurance status and find out if their treatment is covered by insurance.
That’s the explanation we can give about what blockchain is. Broadly speaking, blockchain is a revolutionary technology that provides a secure, transparent, and tamper-resistant decentralized database. Using the concept of a cryptographically connected blockchain, blockchain allows digital transactions and records to be secured in a way that cannot be altered or forged.
Technology continues to grow and change. It is important for businesses to carry out digital transformation and apply various technological innovations to facilitate their operational processes.