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| What is Blockchain? (photo: blogs.iadb.org) |
Blockchains are most commonly associated with cryptocurrency systems, like Bitcoin, where they are used to record and verify transactions. However, the technology has the potential to be used in many other applications as well.
The key innovation of a blockchain is that it provides a way to establish trust and security without the need for a trusted third party, such as a bank or government. This is accomplished through a combination of cryptography, decentralization, and consensus mechanisms that ensure the integrity of the data on the network.
A key difference between a typical database and a blockchain is how the data is organized. In a blockchain, data is grouped together in blocks that contain a set amount of information. These blocks have specific storage capacities and are closed and linked to the previous block once they are full. This forms a chain of data, which is why it's called a blockchain. When new information is added, it is compiled into a new block that is also added to the chain once it's full.
On the other hand, a typical database structures its data into tables. The use of blocks in a blockchain creates a chronological and irreversible timeline of data when implemented in a decentralized manner. Once a block is full, it is permanently added to this timeline. Each block in the chain has an exact timestamp indicating when it was added to the chain.
How Does a Blockchain Work?
Blockchain is a technology that allows digital information to be recorded and shared without the possibility of it being modified. This makes it ideal for creating permanent ledgers or records of transactions that cannot be altered or destroyed. Blockchains are sometimes referred to as distributed ledger technology (DLT).
The idea of blockchain was first introduced in a research project in 1991, but it wasn't widely used until the advent of Bitcoin in 2009. Since then, the use of blockchain technology has skyrocketed, leading to the creation of various cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts.
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Transaction Process
Attributes of Cryptocurrency
Blockchain Decentralization
Consider a scenario where a company possesses a server farm consisting of 10,000 computers that maintain a database containing all of its clients' account information. The company owns a building that houses all of these computers and has complete control over them and their data. Unfortunately, this creates a single point of failure. What happens if the building loses power, or its Internet connection gets severed? What if the building is destroyed or a malicious actor deletes everything with a single command? Any of these scenarios would result in the loss or corruption of the data.
Blockchain technology decentralizes the data in the database by spreading it out among multiple network nodes located in different locations. This not only creates redundancy but also maintains the integrity of the data stored within the network. If someone tries to alter a record at one node, the other nodes will remain unchanged and prevent bad actors from tampering with the data. In the case of Bitcoin's transaction record, if one user tampers with it, all other nodes would cross-reference each other and identify the node with the incorrect information. This system establishes an accurate and transparent sequence of events, ensuring that no single node can manipulate the information stored within the network.
Due to this fact, once information or history has been added to a blockchain (such as transaction data for a cryptocurrency), it cannot be changed or undone. The information stored on a blockchain can include various types of data, not just transaction records, such as legal contracts, government-issued identification, or a company's inventory of products.
To add new information or records to a block on the blockchain, a majority of the computing power of the decentralized network must agree to the addition. This prevents malicious actors from validating fraudulent transactions or double-spending. The blockchain is secured by a consensus mechanism, such as proof of work (PoW) or proof of stake (PoS), which ensures that agreement can be reached even without a single node in control.
Transparency
Due to the decentralized nature of Bitcoin's blockchain, all transactions are visible to anyone who has a personal node or uses blockchain explorers that display live transactions. Each node maintains its own updated copy of the blockchain as new blocks are confirmed and added. This means that it is possible to track the movement of Bitcoin.
For instance, in the past, some exchanges have been hacked resulting in the loss of Bitcoin holdings of their users. Although the hacker's identity may remain unknown, the stolen Bitcoins can be traced. If the stolen Bitcoins are moved or spent, it would be identifiable.
Naturally, the information stored in the Bitcoin blockchain (and most other blockchains) is encrypted, meaning that only the record owner can decrypt it by using a public-private key pair to reveal their identity. This preserves transparency while allowing users to maintain their anonymity on blockchains.
Is Blockchain Secure?
Blockchain technology achieves decentralized security and trust through several methods. Firstly, new blocks are always added to the end of the blockchain in a linear and chronological manner. Once a block has been added, it becomes extremely difficult to alter its contents unless a consensus is reached by the majority of the network. This is because each block has its own hash code, as well as the hash code of the block before it and a timestamp, making it difficult to tamper with the information in a block.
Hash codes are generated using a mathematical function that converts digital information into a string of letters and numbers. If any changes are made to the information within a block, the hash code also changes.
Suppose a hacker, who is also a node operator on a blockchain network, wants to change the blockchain and steal cryptocurrency from other users. If the hacker alters their own copy of the blockchain, it would no longer match with the copies of other users. When other users compare their copies with each other, they would notice the discrepancy and reject the hacker's version of the chain as invalid.
For the hacker to succeed in this attack, they would need to simultaneously control and change 51% or more of the copies of the blockchain. This way, their altered version of the chain would become the majority and accepted as the legitimate one. However, such an attack would require a significant amount of money and resources as the hacker would need to redo all the blocks since they would have different timestamps and hash codes.
Because of the size and rapid growth of many cryptocurrency networks, attempting such a hack would likely be prohibitively expensive. Not only would it be costly, but it would also be futile. Any significant changes made to the blockchain would be detected by network members, who would then create a new version of the chain, called a hard fork, that is unaffected. As a result, the value of the attacked token would drop significantly, rendering the attack worthless since the bad actor would only have control of a worthless asset. The same would apply if the bad actor attempted to attack a new fork of Bitcoin. This system is designed in a way that participating in the network is much more financially incentivized than attacking it.
Bitcoin vs. Blockchain
Stuart Haber and W. Scott Stornetta, two researchers who aimed to create an unalterable document timestamping system, first outlined blockchain technology in 1991. However, it wasn't until nearly twenty years later, with the launch of Bitcoin in January 2009, that blockchain technology was used in a real-world application.
Bitcoin's anonymous creator, Satoshi Nakamoto, introduced the digital currency in a research paper and referred to it as "a new electronic cash system that’s fully peer-to-peer, with no trusted third party." The Bitcoin protocol is built on a blockchain.
It's important to note that Bitcoin uses blockchain technology solely to transparently record a ledger of payments. However, in theory, blockchain technology could be used to immutably record any number of data points. This could include transactions, election votes, product inventories, state identifications, deeds to homes, and much more.
Presently, there are tens of thousands of projects aiming to use blockchain technology in various ways to benefit society beyond just recording transactions. One such application is to securely conduct democratic elections. The immutability of blockchain makes it significantly more challenging to engage in fraudulent voting.
For instance, a voting system could be created where each citizen is given a single cryptocurrency or token. The system would then allocate each candidate a unique wallet address, and voters would send their token or crypto to the wallet address of their preferred candidate. The transparent and traceable nature of blockchain would eliminate the need for manual vote counting and prevent bad actors from tampering with physical ballots.
Blockchain vs. Banks
Blockchains have been touted as a revolutionary technology that could significantly disrupt the financial industry, particularly in the areas of payments and banking. However, there are fundamental differences between banks and decentralized blockchains.
In order to understand these differences, we can compare the traditional banking system to the implementation of blockchain in Bitcoin.
Blockchain vs. Banks
| Feature | Banks | Bitcoin |
|---|---|---|
| Hours open | Typical brick-and-mortar banks are open from 9:00 am to 5:00 pm on weekdays. Some banks are open on weekends but with limited hours. All banks are closed on banking holidays. | No set hours; open 24/7, 365 days a year. |
| Transaction Fees | •Card payments: This fee varies based on the card and is not paid by the user directly. Fees are paid to the payment processors by stores and are usually charged per transaction. The effect of this fee can sometimes make the cost of goods and services rise. •Checks: can cost between $1 and $30 depending on your bank. •ACH: ACH transfers can cost up to $3 when sending to external accounts. •Wire: Outgoing domestic wire transfers can cost as much as $25. Outgoing international wire transfers can cost as much as $45. | Bitcoin has variable transaction fees determined by miners and users. This fee can range between $0 and $50 but users have the ability to determine how much of a fee they are willing to pay. This creates an open marketplace where if the user sets their fee too low their transaction may not be processed. |
| Transaction Speed | •Card payments: 24-48 hours •Checks: 24-72 hours to clear •ACH: 24-48 hours •Wire: Within 24 hours unless international *Bank transfers are typically not processed on weekends or bank holidays | Bitcoin transactions can take as little as 15 minutes and as much as over an hour depending on network congestion. |
| Know Your Customer Rules | Bank accounts and other banking products require "Know Your Customer" (KYC) procedures. This means it is legally required for banks to record a customer's identification prior to opening an account. | Anyone or anything can participate in Bitcoin’s network with no identification. In theory, even an entity equipped with artificial intelligence could participate. |
| Ease of Transfers | Government-issued identification, a bank account, and a mobile phone are the minimum requirements for digital transfers. | An internet connection and a mobile phone are the minimum requirements. |
| Privacy | Bank account information is stored on the bank’s private servers and held by the client. Bank account privacy is limited to how secure the bank's servers are and how well the individual user secures their own information. If the bank’s servers were to be compromised then the individual's account would be as well. | Bitcoin can be as private as the user wishes. All Bitcoin is traceable but it is impossible to establish who has ownership of Bitcoin if it was purchased anonymously. If Bitcoin is purchased on a KYC exchange then the Bitcoin is directly tied to the holder of the KYC exchange account. |
| Security | Assuming the client practices solid internet security measures like using secure passwords and two-factor authentication, a bank account's information is only as secure as the bank's server that contains client account information. | The larger the Bitcoin network grows the more secure it gets. The level of security a Bitcoin holder has with their own Bitcoin is entirely up to them. For this reason it is recommended that people use cold storage for larger quantities of Bitcoin or any amount that is intended to be held for a long period of time. |
| Approved Transactions | Banks reserve the right to deny transactions for a variety of reasons. Banks also reserve the right to freeze accounts. If your bank notices purchases in unusual locations or for unusual items they can be denied. | The Bitcoin network itself does not dictate how Bitcoin is used in any shape or form. Users can transact Bitcoin how they see fit but should also adhere to the guidelines of their country or region. |
| Account Seizures | Due to KYC laws, governments can easily track people's banks accounts and seize the assets within them for a variety of reasons. | If Bitcoin is used anonymously governments would have a hard time tracking it down to seize it. |
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How Are Blockchain Used?
Blockchains are utilized in various ways. In the case of Bitcoin's blockchain, each block contains information about financial transactions. However, there are now over 10,000 other cryptocurrency systems utilizing blockchain technology. It has been discovered that blockchain is also a trustworthy method for storing data related to different types of transactions beyond finance.
Several companies have already integrated blockchain into their operations, including Walmart, Pfizer, AIG, Siemens, Unilever, and others. For instance, IBM has developed its Food Trust blockchain to track the entire journey of food products from their origin to their destination.
Why is this necessary? The food industry has experienced numerous outbreaks of E. coli, salmonella, listeria, and accidental contamination of food products. In the past, it has taken several weeks to identify the source of these outbreaks or illnesses caused by contaminated food. By utilizing blockchain, companies can track the entire journey of a food product, from its origin to each stop it makes, and ultimately, its delivery. If a food product is contaminated, it can be traced back to its origin through each stop it made. Moreover, companies can also identify everything else it may have come into contact with, allowing for early detection of the issue and potentially saving lives. This is just one example of how blockchain can be utilized, as there are numerous other applications of blockchain technology.
Bank and Finance
Banking could possibly benefit more than any other industry by incorporating blockchain technology into its operations. Typically, financial institutions are only open during business hours and operate five days a week. This means that if you were to deposit a check on a Friday at 6 p.m., you would likely have to wait until Monday morning to see that money in your account. Even if you deposit during business hours, the transaction can take one to three days to verify due to the high volume of transactions that banks need to settle. In contrast, blockchain operates continuously and does not have a downtime.
By integrating blockchain technology into banks, consumers can witness their transactions being processed in as little as 10 minutes. This is essentially the time it takes to add a block to the blockchain, regardless of the day, time or holiday. With blockchain, banks have the opportunity to exchange funds between institutions in a more secure and prompt manner. For example, in the stock trading business, the settlement and clearing process can take up to three days or more, especially when trading internationally. This implies that the money and shares remain frozen for that period of time.
Considering the large sums of money involved, even the few days that the money is in transit can lead to significant costs and risks for banks.
Currency
Blockchain serves as the foundation for cryptocurrencies such as Bitcoin. The Federal Reserve controls the U.S. dollar in a centralized system, where a user's data and currency are technically under the control of their bank or government. If the bank is hacked, the user's private information is at risk, and if the bank collapses or the government is unstable, the currency value is at risk. In 2008, several banks that were failing were rescued using taxpayer funds. These are the concerns that gave rise to Bitcoin's creation and development.
By distributing its operations across a network of computers, blockchain enables Bitcoin and other cryptocurrencies to function without the need for a central authority. This not only reduces risks but also eliminates many processing and transaction fees. It can also offer individuals and businesses in countries with unstable currencies or financial infrastructures a more stable currency with a wider range of applications and a broader network of people and organizations with whom to do business, both locally and internationally.
Using cryptocurrency wallets as savings accounts or payment methods is particularly significant for people without government identification. Some countries may be war-torn or lack a functioning infrastructure to provide identification. Citizens in such countries may not have access to savings or brokerage accounts, and as a result, have no secure means of storing their wealth.
Healthcare
The healthcare industry can use blockchain technology to securely store their patients' medical records. Once a medical record is created and signed, it can be saved on the blockchain, giving patients the assurance that the record cannot be altered. Personal health records can be encrypted and stored on the blockchain using a private key, ensuring that only authorized individuals can access them, thus maintaining privacy.
Property Records
Recording property rights at the local Recorder's Office is a burdensome and inefficient process. Currently, a physical deed has to be handed over to a government employee at the recording office, who manually enters it into the central database and public index of the county. In case of any property disputes, claims to the property must be reconciled with the public index.
This process is not only time-consuming and costly but also prone to human errors, which makes tracking property ownership less efficient. However, with the potential of blockchain technology, scanning of documents and tracking physical files at the local recording office can be eliminated. If property ownership is stored and verified on the blockchain, owners can trust that their deed is accurately and permanently recorded.
In countries that are torn by war or have little to no government or financial infrastructure, proving ownership of property is almost impossible. However, if a group of people in such an area can leverage blockchain technology, they can establish transparent and clear timelines of property ownership.
Smart Contracts
A smart contract is a computer code that can be integrated into the blockchain to facilitate, verify, or negotiate a contract agreement. Users agree to the set of conditions under which the smart contract operates. Once those conditions are met, the terms of the agreement are automatically executed.
For instance, suppose a potential tenant wants to lease an apartment using a smart contract. The landlord agrees to provide the tenant with the door code to the apartment after the tenant pays the security deposit. Both the landlord and the tenant would send their respective parts of the deal to the smart contract, which would hold onto and exchange the door code for the security deposit automatically on the date of the lease commencement. If the landlord fails to provide the door code by the lease date, then the smart contract refunds the security deposit. This process would eliminate the fees and procedures typically associated with the involvement of a notary, a third-party mediator, or attorneys.
Supply Chains
Supply chains refer to the sequence of activities involved in the production and delivery of goods and services to consumers. In the context of the IBM Food Trust, blockchain technology is utilized by suppliers to record the origin of materials they acquire. This enables companies to authenticate their products and validate labels like "Organic," "Local," and "Fair Trade."
Forbes reports that the food industry is progressively embracing blockchain to trace the journey of food products from the farm to the end-user, ensuring safety and transparency.
Voting
As previously stated, blockchain technology can be utilized to create a contemporary voting system. By utilizing blockchain for voting, the possibility of election fraud could be eliminated, as was demonstrated in the West Virginia midterm elections of November 2018, leading to increased voter turnout. Adopting blockchain technology for voting would make it extremely difficult to tamper with the votes. The blockchain protocol would also ensure transparency in the election process, reducing the number of personnel needed to conduct an election and providing officials with nearly instantaneous results. As a result, there would be no need for recounts or worries about potential fraud jeopardizing the election.
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Pros and Cons of Blockchain
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Despite its complexity, the potential of blockchain as a decentralized form of record-keeping is nearly limitless. It offers benefits such as increased user privacy, heightened security, reduced processing fees, and fewer errors, which may lead to applications beyond those currently envisioned. However, there are also some drawbacks to consider.
Pros
- Increased accuracy by eliminating human involvement in verification.
- Cost savings by removing the need for third-party verification.
- Decentralization makes tampering more difficult.
- Transactions are secure, private, and efficient.
- The technology is transparent.
- It provides an alternative to traditional banking and a means of safeguarding personal information for citizens of countries with unstable or underdeveloped governments.
Cons
- Mining Bitcoin involves significant technology costs.
- The number of transactions per second is low.
- Bitcoin has been historically associated with illicit activities on the dark web.
- Regulations on Bitcoin vary across jurisdictions and their future is uncertain.
- There are limitations to storing data related to Bitcoin transactions.
Benefits of Blockchains
The Precision of Blockchain Transactions
The blockchain network relies on a vast network of computers to approve transactions, significantly reducing the need for human involvement in the verification process. This results in a more accurate recording of information with minimal human error. Even if a computer were to make a mistake during the process, the error would only affect one copy of the blockchain, and spreading it to the rest of the network would require at least 51% of the computers in the network to make the same mistake, which is highly unlikely for a large and expanding network like Bitcoin's.
Cost Reductions
Traditionally, consumers have to pay fees to banks for transaction verification, notaries for document signing, or ministers for marriage ceremonies. With blockchain, the need for third-party verification is eliminated, which also reduces the associated costs. For instance, businesses have to pay a small fee when accepting credit card payments due to the processing by banks and payment processing companies. However, Bitcoin, which has no central authority, has limited transaction fees.
Decentralization
In blockchain, information is not stored in a central location. Instead, it is copied and distributed across a network of computers. Whenever a new block is added to the blockchain, every computer on the network updates its blockchain to reflect the change. By spreading the information across a network, rather than storing it in a central database, blockchain becomes more resistant to tampering. If a hacker were to gain access to a copy of the blockchain, only a single copy of the information would be compromised, rather than the entire network.
Efficient Transactions
Transactions that go through a central authority can take several days to settle. For instance, if you deposit a check on a Friday evening, you might not see the funds in your account until Monday morning. Financial institutions typically operate during business hours, usually five days a week. However, blockchain works 24/7/365. Transactions can be completed in as little as 10 minutes and can be considered secure after just a few hours. This is particularly advantageous for cross-border trades, which can take much longer due to time zone differences and the need for all parties to confirm payment processing.
Private Transactions
The term "Private Transactions" refers to transactions on blockchain networks that are not visible to the public. In most cases, blockchain networks operate as public databases, where anyone with an internet connection can view the transaction history. However, users can access only transaction details and not identifying information about those users who made those transactions.
It is often misunderstood that blockchain networks like Bitcoin are anonymous. In reality, they only offer confidentiality. When a user makes a public transaction, their public key is recorded on the blockchain, but their personal information is not. If a person has made a Bitcoin purchase on an exchange that requires identification, their identity will be linked to their blockchain address, but the transaction itself will not reveal any personal information.
Secure Transactions
"Secure Transactions" involve verifying the authenticity of transactions on the blockchain network. Once a transaction is recorded, the blockchain network relies on thousands of computers to verify the accuracy of the transaction details. After the validation process is complete, the transaction is added to a block on the blockchain.
Each block on the blockchain has its own unique hash, and it also includes the hash of the previous block in the chain. If any information on a block is altered, its hash code changes as well. However, the hash code of the following block in the chain remains unaffected. This makes it incredibly challenging to modify the information on the blockchain without detection.
Transparency
"Transparency" is a key feature of most blockchains, as they are typically built using open-source software. This means that anyone can access and view the code used to create the blockchain. This feature allows auditors to review cryptocurrencies like Bitcoin for security and helps to ensure that the system is functioning properly.
However, the fact that the blockchain code is open-source also means that there is no central authority controlling it, and anyone can suggest changes or upgrades to the system. If a majority of the network users agree that the new version of the code with the upgrade is valuable and secure, then Bitcoin can be updated accordingly.
Banking the Unbanked
Banking the Unbanked is the process of providing financial services to people who do not have access to traditional banking systems. Blockchain and Bitcoin have enabled people of all backgrounds, regardless of ethnicity, gender, or cultural background, to access these services. According to The World Bank, approximately 1.7 billion adults worldwide do not have bank accounts or any means of storing their money or wealth, mainly residing in developing countries where the economy relies on cash.
Typically, these people earn small amounts of money that are paid in cash, which they must then store in hidden locations, leaving them vulnerable to theft and violence. However, with Bitcoin, the keys to a wallet can be stored on paper, a cheap mobile phone, or even memorized, making them easier to hide than a small pile of cash.
In the future, blockchains aim to provide solutions that extend beyond wealth storage, including storing medical records, property rights, and legal contracts.
Drawbacks of Blockchains
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The Expense of Technology
Even though using blockchain technology can save users money on transaction fees, it still comes with a cost. The PoW system that the bitcoin network employs to confirm transactions requires a significant amount of computational power. In fact, the power used by the millions of computers on the bitcoin network is comparable to the annual consumption of Norway and Ukraine combined.
Despite the high cost of mining bitcoin, users continue to validate transactions on the blockchain, resulting in increased electricity bills. This is because when miners add a block to the bitcoin blockchain, they receive enough bitcoin as a reward to justify the time and energy spent. However, for blockchains that don't use cryptocurrency, miners will need to be paid or incentivized in some other way to confirm transactions.
Some solutions to these problems are emerging. For instance, bitcoin-mining farms have been established that utilize solar power, excess natural gas from fracking sites, or energy from wind farms.
Speed and Data Inefficiency
The speed and data inefficiency of blockchain can be exemplified by Bitcoin. Bitcoin's Proof of Work (PoW) system takes approximately 10 minutes to add a new block to the blockchain, which means that the network can only handle around seven transactions per second (TPS). Although other cryptocurrencies like Ethereum perform better than Bitcoin, they still face limitations due to blockchain.
In contrast, Visa can process up to 65,000 TPS, which highlights the inefficiencies of blockchain technology. To address this issue, blockchain developers have been working on solutions for years, and some blockchains can now handle more than 30,000 TPS.
Ethereum's upcoming upgrade, which merges its main net and beacon chain and includes sharding (splitting the database so that more devices can run Ethereum), is predicted to increase the TPS to 100,000. This upgrade will increase network participation, reduce congestion, and improve transaction speeds. Another pressing issue for the scalability of blockchains is the block size debate, which continues to be a significant concern.
Illegal Activity
Although the confidentiality provided by the blockchain network protects users from cyber attacks and safeguards their privacy, it also creates opportunities for illegal trading and activities to take place on the network. One well-known instance of such illicit transactions is the Silk Road, an online dark web marketplace that facilitated the illegal trade of drugs and money laundering from February 2011 to October 2013. The FBI eventually shut down the Silk Road.
The dark web enables users to buy and sell illegal items without being traced, using the Tor Browser and making purchases with Bitcoin or other cryptocurrencies. In the United States, financial service providers are required by regulations to collect information about their customers when they open an account, verify their identities, and confirm that they are not on any list of known or suspected terrorist organizations.
This system has advantages and disadvantages. It provides access to financial accounts for anyone, but it also makes it easier for criminals to conduct transactions. Some argue that the positive uses of cryptocurrency, such as providing banking services to the unbanked, outweigh the negative uses, especially since most illegal activities are still conducted with untraceable cash.
Although Bitcoin was initially used for illegal activities, its transparent nature and maturity as a financial asset have led illegal activity to shift towards other cryptocurrencies, such as Monero and Dash. As a result, illegal transactions account for only a small fraction of all Bitcoin transactions today.
Regulation
The term "regulation" refers to the rules and laws put in place by governments to control or manage certain activities. In the world of cryptocurrencies, many people are worried about government regulations that may be imposed on these digital assets. Although it may be challenging to completely eradicate decentralized networks like Bitcoin as they continue to expand, governments could potentially prohibit the possession of cryptocurrencies or engagement in their networks.
However, this worry has lessened over time, as major corporations like PayPal have started to enable the ownership and use of cryptocurrencies on their platform.
Bottom Line
In simple terms, a blockchain is a shared database or ledger where data is stored in blocks, and every node in the network has a copy of the entire database. This ensures security since any attempt to edit or delete an entry will be rejected by the majority of the network.
As of 2022, there are over 10,000 active cryptocurrencies based on blockchain, along with several hundred non-cryptocurrency blockchains.
There are two types of blockchains: public and private. A public blockchain allows anyone to join the network and establish a node, and it requires robust security measures like cryptography and proof of work (PoW) to secure the network. A private blockchain, however, requires approval for each node to join and is considered to be more trustworthy, so the security measures can be less robust.
A blockchain platform enables users and developers to build new applications on top of an existing blockchain infrastructure. Ethereum is an example of a blockchain platform, which features its native cryptocurrency called ether (ETH). However, Ethereum also supports the creation of smart contracts, programmable tokens used in ICOs, and NFTs, which all rely on the Ethereum infrastructure and are secured by nodes on the Ethereum network.
The concept of blockchain was first proposed in 1991 by Stuart Haber and W. Scott Stornetta, who aimed to create an unalterable system for document timestamps. In the late 1990s, Nick Szabo, a Cypherpunk, suggested using a blockchain to secure a digital payment system called bit gold, which was never implemented.
Blockchain technology has many practical applications and is gaining more attention because of cryptocurrencies like bitcoin. It has the potential to make business and government operations more accurate, efficient, secure, and cost-effective by eliminating intermediaries. As we move into the third decade of blockchain, we can expect to see more growth, such as NFTs and the tokenization of assets. Legacy companies are expected to catch on to the technology in the near future.
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Source: https://www.investopedia.com
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