The terms blockchain and cryptocurrency are often confused as synonymous. However, the former is a single phenomenon whose coverage goes beyond a single domain. There are thousands of cryptocurrencies, but the unifying factor is their use of blockchain technology. Not all countries support Blockchain technology yet but Japan, together with the USA, Australia, China and United Arab Emirates are among the top ten countries in the world leading the Blockchain technology. Japan recently updated their blockchain and cryptocurrency regulation and is one of the few countries where the government actively has encouraged the industrial sector to test and implement blockchain and other technology related to cryptocurrency.
The big question is of course, what is blockchain technology and what does it have to do with bitcoin and cryptocurrencies?
What is Blockchain?
A technology that facilitates the chronological recording and verification of transactions is the simple answer to this question. Blockchain facilitates the creation and distribution of ledgers by and amongst a closed group of interconnected nodes. Better still, it allows the public management of the transactional data. It means that everyone within the locked group can retrieve the information without restriction. However, there is more to this.
Upon creation, each set of data is arranged in individual blocks. Each block is individually locked and added to a chronological chain. It means that an individual member of the group cannot manipulate the data in each block. It is only through consensus that the information can be edited. The advantage of this restriction is that all members contribute to the process of editing.
Unlike in the traditional systems, each member has access to the information at the same time. This feature eliminates the need for the tiresome processes of replication, distribution, and collection whenever editing is required. Also, the blockchain has a unique security system. The requirement that all members do the editing process ensures a desirable level of transparency.
Blockchain at Bitcoin Casinos
Businesses that use blockchain technology can reduce the possibility of fraudulent activities. This has been instrumental in propelling modern industries that struggled with establishing trust in the market, more so those in the online gambling niche. Today, many online Bitcoin casinos in Japan and in the rest of the world are using blockchain technology. Supply chains and logistics, the financial sector, and even real estate are other industries that have all progressed from paper-based records to more transparent channels.
Structures of storage
Another way of understanding blockchain is through the perspective of a database. Like a common database, a blockchain assists in the storage of various related sets of information. Each block is also limited in capacity. The system locks and chains each block of related information upon reaching the limit or when another set of information is created in a separate block.
The main distinction between the two, a database and a blockchain, is the storage structure. A database preserves data in tables while a blockchain turns the information into blocks. The ability of a blockchain to store information means that it is a database. However, some databases, especially the traditional ones, do not store data in blocks. It means that they cannot be considered as blockchains. Having understood the two perspectives, we delve deeper into how blockchain works.
Steps of a Blockchain Transaction
A series of activities takes place before a blockchain transaction is considered complete. They include:
- Data recording: Each of the peers involved in making the data submits their details to ensure that they are the only ones who can get access to the information at a later date.
- Transactions are then entered into the system. Upon entry, it is made accessible to other peers in the interconnected but decentralized system for authentication.
- Upon verification of legitimacy, the transactions are huddled together into a block(s).
- Each of the blocks is chained to the preceding ones, thereby adding to the permanent history of transactions. The transaction is now complete.
Pros and cons of Blockchain technology
With all its features, how well does blockchain serve its users?
A major advantage of this modern technology is that it decentralizes services. Creating access to a large number of authorized personnel at all times eases the process of completing transactions. This ability makes it more efficient than the traditional centralized system in which each service provider had to reference a centralized database. It was time-consuming and unreliable.
It is also agreeable that blockchain has a high level of transparency. The ability of all participants to verify each transaction before storage makes it almost foolproof. Related to this advantage is the indelibility of past transactions. Upon storage, it is only through the authorized participants' consensus that a transaction can be edited. This feature adds to the security of data.
Despite these benefits, the technology may be faulted on various grounds. Among them is that it is not downright unhackable. Like all other systems, blockchain is vulnerable to advanced hacking techniques and bugs. However, this downside is largely reduced through the storage of information in locked blocks. In another perspective, the decentralization of networks is imperfect. Despite decentralization, some activities within the networks are centralized. Being centralized means susceptibility to hackers.
The successful application of blockchain suggests its ability to solve a significant percentage of problems in contemporary society. Firms should seek it and enjoy its benefits as it continues to evolve and revolutionize the world.