Understanding the New Trend of Blockchain Technology
Understanding What is Blockchain
Are you used to storing data in cloud storage like Google Drive or iCloud? Just like cloud storage, blockchain is an internet cloud where users store data. However, unlike cloud storage, the data stored on the blockchain cannot be changed. The data stored is also not material content, but transaction data where an asset history can be tracked. Of course, the assets in the blockchain in question are cryptocurrency assets. The transaction records will later form various blocks that are connected to each other which then become a network like a chain. So, basically, a blockchain is a ledger or ledger where all cryptocurrency transactions are recorded.
That’s why blockchain is transparent, everyone can track and validate a transaction recorded on the blockchain. Does blockchain work automatically? Not. Validators or miners are a group of people who exist behind the stability of a blockchain. They have to make sure a transaction can be said to be valid to be recorded in the block, the blocks then come together and form a blockchain. That is why then the internet of the cloud storage system is called a blockchain.
We can take the example of a Bitcoin transaction. Person A wants to sell Bitcoin and B wants to buy Bitcoin. This request will be seen and validated by the miner. If it is valid, the transaction will be executed immediately. A will get Bitcoin and B will get money or other tokens from the money used by A to buy Bitcoin.
This process runs automatically with the existence of a crypto exchange (exchange). A and B only need to pay a gas fee to make transactions on the exchange. The presence of blockchain is vital for platforms with decentralized or no intermediary DEX systems.
Know the Types of Blockchain
Unlike a public blockchain, the identity of users who transact on a private blockchain can be known. However, the private blockchain has its own advantage, namely the speed of transactions. This is because it has centralized authority and fewer users. A transaction in a private blockchain depends on an authorized node and must be validated by a centralized system, not a decentralized network. A transaction involving fewer node codes also makes the private blockchain more secure from unusual transactions or hack attacks.
Concordium blockchain is a permissionless decentralized blockchain with industrial-grade quality. They are designed for host segment agnostic use, including the first phase of decentralized applications (DApps) that are strictly compliant with Defi regulations and protocols. This platform is designed to balance privacy with accountability through layered IDs that ensure each wallet is connected to a real identity that has been verified by an ID verifier.
Known as a permissionless type of blockchain, the public blockchain is the most popular and most decentralized type of blockchain. Bitcoin and Ethereum are examples of this type of blockchain. Anyone connected to a public blockchain can access blocks and chains in a public blockchain. This type of blockchain is also known as blockchain with the participation of validators and anonymous miners.
When transactions take place in the blockchain, public access can be seen by all parties without the need to log in to the network. Even though it is transparent, your privacy will be maintained because the user’s identity is hidden by complex cryptography that only shows the wallet address or public address. When you want to find someone’s transaction history, then you can’t see it as “Lika sent 1 BTC” but replaced with “MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”. Even though your identity is encrypted, you can still see all transactions recorded by the blockchain with that wallet address. This is different from the system in conventional banks where the identity of the account owner can be accessed.
The level of security in recording transactions
The database on the blockchain is append-only, that is, it cannot be changed and can only add data. With this database system, it is difficult for hackers to penetrate the database of a blockchain. Of course, the risk of fraudulent transactions on the blockchain database is also very minimal because the append-only system makes the audit process easier and more accurate.
Direct transactions without third parties
Blockchain makes the entire recording and verification process for each transaction directed and immutable, that is, it cannot be changed or hacked. Transactions between users on the blockchain unlike transactions at banks that require a third party, namely a bank. Blockchain uses smart contracts as a system that eliminates third parties in transactions, so transactions last 24 hours without any server maintenance or downtime.
Online for 24 hours
The existence of a smart contract is a system that eliminates third parties in transactions and makes transactions on the blockchain last 24 hours without any server maintenance or downtime.
Disadvantages of Blockchain
Requires a large amount of energy and computing power
Blockchain technology requires constant and stable computing power. Blockchain works on the basis of a Proof-of-Work consensus algorithm which is solved by miners. They are given incentives to solve complex mathematical formulas. However, the Proof-of-Work consensus algorithm is certainly accompanied by high energy consumption, making it less effective to be applied to the use of general or conventional financial technology. In the blockchain, every ledger that is updated due to a new transaction is supported by the miners by solving a mathematical problem that consumes a lot of energy.
However, not all blockchain solutions work the same way. There are some blockchains that don’t require a consensus algorithm that miners have to support. For example, a private blockchain (a private network) or a permission blockchain. Private blockchain or permission networks also do not require global consensus as they use efficient consensus methods to reach consensus.
However, keep in mind that almost all popular blockchains such as Bitcoin, Ethereum, and Solana are public blockchains that require a consensus algorithm to be solved in every transaction. In short, permission blockchains are more energy efficient whereas public blockchains require a lot of energy to operate.
Everyone can transact on a public blockchain whether it is a centralized or decentralized blockchain. Every user in the blockchain network has an exact copy of the data in a ledger in the blockchain. If a user’s ledger is changed or attacked, most users will deny any suspicious transactions from that ledger. A decentralized blockchain is an example of a public blockchain that is difficult to update because everyone can participate as a validator that allows a transaction to run or miners as problem solvers in mathematical questions. This causes the update may not occur completely, because it depends on the decision of the participants in the blockchain to update or not.
That’s the basic explanation of what blockchain is. Are you interested in learning more about blockchain? There are already several campuses that offer that major, you know. You can read about it in the article Watch World Campuses Adopting Blockchain Majors. Come on, continue to follow our articles so that you understand more about the world of blockchain and cryptocurrencies. Don’t forget to visit the Litedex, Instagram, Twitter, YouTube, and TikTok websites to keep getting updated information from us!