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The Sunday Mail BLOCKCHAIN is a term that has become increasingly popular in recent years, especially with the rise of cryptocurrencies like Bitcoin and Ethereum. Firstly, let us clear up any misconceptions. It is essential to understand that the Bitcoin and the blockchain are different. While the Bitcoin is a type of cryptocurrency, the blockchain is the underlying technology that enables its secure and decentralised operation. Cryptocurrencies like Bitcoin are digital assets that are designed to function as mediums of exchange, utilising blockchain technology to record transactions in a distributed ledger securely. Therefore, while the Bitcoin relies on the blockchain for its operation, the latter is a broader concept, with many potential applications beyond just the cryptocurrency. So, what exactly is the blockchain, and how does it work? This article will explore the basics of the blockchain technology — including its history, structure and potential uses. The blockchain is a secure database shared across a network of participants, where up-to-date information is available to all participants simultaneously. Rather than relying on a central authority like a bank or government to manage and verify transactions, the blockchain allows for decentralised control and verification by a network of users. The idea of a blockchain was first proposed in 2008 by an unknown “person” or group using the pseudonym Satoshi Nakamoto. Nakamoto’s vision was a decentralised system for verifying and recording transactions without the need for intermediaries like banks or financial institutions. At the heart of a blockchain is a “chain of blocks”, a series of interconnected blocks containing a record of several transactions. These blocks are linked together in chronological order, forming a chain of data that can be accessed and verified by anyone with access to the network. Security is a crucial feature of the blockchain technology. Each block in the chain is secured using advanced cryptographic techniques, making it virtually impossible to alter or tamper with the data contained within. This makes the blockchain ideal for storing sensitive information like financial transactions or medical records. The blockchain is premised on transparency since each block in the chain is visible to everyone on the network; there is no room for hidden or fraudulent activity. Some critical elements of a blockchain are distributed ledger technology (DLT), immutable records and smart contracts. All network participants have access to the distributed ledger and its immutable record of transactions. This shared ledger records transactions only once, eliminating the duplication of effort typical of traditional business networks. No participant can change or tamper with a transaction after it has been recorded in the shared ledger. If a transaction record includes an error, a new transaction must be added to reverse the error, and both transactions are then visible. A set of rules called a smart contract is stored on the blockchain and executed automatically to speed up transactions. A smart contract can define corporate bond transfer conditions, including terms for paying travel insurance and much more. How does the blockchain work? When a user initiates a transaction on a blockchain network, a corresponding block is generated to indicate the creation of the transaction. This block contains information about the transaction and serves as a record of it. The newly created block is then broadcast across the peer-to-peer network consisting of nodes (computers) that validate the transaction. Transactions can involve cryptocurrency, contracts, records or other valuable data. After validation, the transaction is appended to the blockchain network by combining it with other blocks to create a new block of data for the ledger. It is worth noting that each new transaction creates a secured block bound together with others using cryptographic principles. Each new block added to the blockchain network further confirms its security and immutability. Each block in the chain contains a unique code, known as a “hash”, which is generated using complex mathematical algorithms. This hash serves as a digital fingerprint for the block, ensuring it cannot be altered or tampered with without being detected. A node must first solve a mathematical puzzle called a “proof of work” algorithm to add a new block to the chain. This process requires significant computational power and helps ensure the network’s integrity by making it difficult for malicious actors to manipulate the ledger. Uses of the blockchain Cryptocurrency is the first to come to our minds. The Bitcoin, established in 2009, is considered the first cryptocurrency that gained widespread adoption. Nevertheless, the number of cryptocurrencies available has surpassed 20,000 and can be traded across more than 500 exchanges. Imagine the case where a customer or friend has to make an RTGS transaction on a Friday afternoon. In that case, you may have experienced the frustration of having to wait until Monday morning to receive the money. However, with the integration of the blockchain technology into banking systems, customers can expect to experience faster transaction processing times of just minutes or even seconds. Unlike traditional banking systems, which are subject to time constraints and holidays, blockchain-powered transactions can be added to the chain at any time of the day or week. This means customers can enjoy uninterrupted and swift access to their funds, resulting in a more efficient and seamless banking experience. The blockchain technology can revolutionise the healthcare industry by providing a more secure and efficient way of storing patients’ medical records. Healthcare providers can leverage on the blockchain technology to ensure that sensitive health information is tamper-proof, transparent and easily accessible. By generating and signing medical records into the blockchain, patients receive a higher level of proof and confidence in the authenticity and integrity of their medical data. However, like any other technology, the blockchain has its fair share of drawbacks. They include the significant energy expenditure required to maintain the network, lack of scalability for specific use cases, and potential legal and regulatory hurdles in some jurisdictions. On the other hand, the blockchain’s decentralised and immutable nature can be a double-edged sword, as it may make it difficult to correct errors or undo malicious activity. Despite these challenges, the future of the blockchain looks bright. As more businesses and other organisations begin to explore the possibilities of this revolutionary technology, we can expect to see new and innovative use cases emerge in the years ahead. * John Tseriwa is a tech entrepreneur and a digital transformation advocate focusing on delivering business solutions powered by 4IR technologies. He can be contacted at: or +263773289802.
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