The blockchain technology market has been predicted to shoot up from 4.9 billion USD to around 67.4 billion USD by 2026. According to the data collected from CB Insights, multiple startups and established firms that invested in this naive technology saw a record rise of $4.3 billion which is around nine folds higher than the revenue generated last year. These numbers are deemed to grow higher as most of industries will continue adopting blockchain technology in the future. Owing to the security and transparency blockchain offers, companies are big-time investing in adapting blockchain-based operations. IBM, the tech giant, has already invested $200 million and many European companies are exploring options. So let's first understand what this technology is and why it has become so promising for the future?
What is Blockchain Technology?
Blockchain is a distributed, decentralized ledger with records of transactions that are immutable. In simple words, it is a process of recording information in a way that cannot be changed, deleted, updated, or altered. It is called Distributed Ledger Technology (DLT) because each ledger is duplicated and distributed amongst all the network participants. This ensures complete transparency in the transactions because each participant in the network has a copy of the ledger.
How does Blockchain work?
Blockchain has a primary unit where the information of any transaction is stored which is called a block. When the information stored in one block overflows, the second block links itself to the corresponding first block via identifying the hash.
Hash is a cryptographic signature ( a unique code) that is generated for each block. Now once the first block is filled with information, a second block is created with its own hash code and a hash code of the previous block which helps it identify its position (i.e. after the first block) to link itself and create the chain. Subsequently, each block connects with the previous and the next block following the same protocol forming a sequence of transactions. This sequence has a timestamp and the hash as mentioned above. Now even if the hacker will maliciously try to corrupt the system, the change in any block will be directly reflected which the network participants can easily identify.
The reason being, even if there is a slight change in the records of the block, another block with a different hash ID will be created which can be identified easily. The hacker will have to alter the hash numbers of the entire network to make these changes unrecognizable. This is technically impossible because there would be 1000s and millions of blocks already created in the system which would take ages to get tempered. Thus, blockchain technology, especially when designed and executed by a custom blockchain development company, proves to be 99.9% secure and tamper-evident.
Step by Step process of Blockchain:
A new transaction takes place. This data is distributed to all the linked systems across the world.
The network participants confirm the validity of the records/transaction.
Once validated, this transaction is clustered with the previous block holding similar previous transactions.
Simultaneously with each transaction holding similar records, a chain of blocks is created. These blocks form a collection of all the transactions that have happened to date.
The transaction is processed to be complete.
Benefits of Blockchain
Systems can be vulnerable to cyberattacks and as a result, could delay outcomes and waste efforts. To avoid such things to happen, blockchain has paved a secure way wherein there would be absolutely no security breaches at all. So here are some of the biggest advantages that blockchain startups can enjoy.
Highest Security
None of the record-keeping systems are as secure as blockchain. Blockchain secures every record by encrypting and tagging it to the previous as well as the next immediate record via hashing method. Whatever is recorded on a blockchain is immutable and since each record has a copy of it in the node, it is not possible to make changes. Any change will be automatically rejected by other nodes.
Enhanced performance
Blockchain improves efficiency and accelerates all the processes by introducing automation and eliminating human errors. Since the transactions are stored in decentralized ledgers, the data validation becomes more trustworthy, quick, and efficient.
Greater Traceability
Blockchain creates a network of transparent supply chains which could be used to trace events like loss of goods, theft, etc. Each and every part of the supply chain process can be traced to ensure there is no alteration of the records.
Reduced Cost
Businesses put a great deal of money in managing their operations via third parties which can be otherwise used for innovation and business improvement. Blockchain eliminates the cost associated with third-party vendors. Since this technology doesn't need validation of transactions, there is no further cost involved.