Blockchain is a decentralised and distributed digital ledger technology that securely records transactions across multiple computers in such a way that the registered transactions cannot be altered retroactively. It is the underlying technology behind cryptocurrencies like Bitcoin and Ethereum but can be used for a wide variety of applications beyond digital currencies, including supply chain [...]

By Published On: December 5, 2024

Blockchain is a decentralised and distributed digital ledger technology that securely records transactions across multiple computers in such a way that the registered transactions cannot be altered retroactively. It is the underlying technology behind cryptocurrencies like Bitcoin and Ethereum but can be used for a wide variety of applications beyond digital currencies, including supply chain management, voting systems, and digital contracts.

Key Features of Blockchain:

  1. Decentralisation: Unlike traditional centralised systems, blockchain operates on a peer-to-peer network, with no single authority controlling the data. Each participant (node) in the network has a copy of the entire blockchain.
  2. Immutability: Once a transaction is recorded on a blockchain, it is extremely difficult to alter or delete. Each block contains a cryptographic hash of the previous block, creating a secure chain of records.
  3. Transparency: All transactions on a blockchain are visible to all participants, ensuring transparency. However, the identity of the participants is often pseudonymous, providing some level of privacy.
  4. Security: Blockchain uses cryptographic techniques to secure data, making it resistant to fraud and unauthorised tampering. The consensus mechanisms (e.g., Proof of Work or Proof of Stake) help validate transactions and maintain the integrity of the network.

How Blockchain Works:

  1. Transaction Creation: A participant initiates a transaction, such as transferring cryptocurrency, signing a smart contract, or recording an event.
  2. Validation: The transaction is broadcast to the network, where other participants (nodes) validate it according to the consensus rules.
  3. Block Creation: Once validated, the transaction is grouped with others into a “block” of data.
  4. Chain Formation: The newly created block is added to the existing blockchain, with a cryptographic reference to the previous block, forming a secure chain.
  5. Completion: Once added to the blockchain, the transaction is considered confirmed and immutable, and the update is visible to all participants.

Types of Blockchain:

  1. Public Blockchain: Open to anyone who wants to participate in the network. Examples include Bitcoin and Ethereum.
  2. Private Blockchain: Restricted to a specific group of participants, often used by businesses for internal purposes. An example is Hyperledger.
  3. Consortium Blockchain: A hybrid blockchain in which a group of organisations collectively manage the network, often used for supply chains or cross-organisational collaboration.

Use Cases of Blockchain:

  1. Cryptocurrencies: Blockchain is the technology behind digital currencies like Bitcoin and Ethereum, enabling secure, peer-to-peer financial transactions.
  2. Smart Contracts: These are self-executing contracts with terms directly written into code. Platforms like Ethereum allow for decentralised applications (dApps) to run smart contracts.
  3. Supply Chain Management: Blockchain can track goods as they move through a supply chain, providing transparency, reducing fraud, and improving efficiency.
  4. Voting Systems: Blockchain can offer secure and transparent voting mechanisms that ensure the integrity of election results.
  5. Digital Identity: Blockchain can be used to store and verify digital identities, providing secure authentication and reducing identity theft.
  6. Healthcare: Blockchain can securely store and share medical records, improving patient privacy and reducing administrative inefficiencies.