What is blockchain? Blockchain is a technology that has recently become increasingly popular in various countries. Not only among the IT community, but blockchain technology is also increasingly familiar among the general public.
So, what exactly is blockchain? What is able to make this technology special and much discussed today? To answer these questions, let’s look at the following explanatory articles about blockchain technology together.
What is Blockchain?
Blockchain is a technology that is used as a digital data storage system that is connected via cryptography. The use of blockchain technology cannot be separated from Bitcoin and Cryptocurrency, although there are many sectors that can take advantage of this technology.
When viewed from the naming system, blockchain itself consists of two words, namely block which means group, and chain. This reflects the way blockchain works, which uses computer resources to create blocks that are linked (chain) to execute a transaction.
How Blockchain Works
Simply put, the way blockchain works starts when a block stores new data. The blockchain system itself consists of two types of records, transactions and blocks. Uniquely, each block contains a cryptographic hash to form a network.
Here, the cryptographic hash function is to take the data from the original block and convert it into a compact string. This string becomes a detecting alarm if potential sabotage is found. Blockchain technology is also decentralized, so that no single authority has full control, but is split into each computer that has special software installed.
Utilization of Blockchain Technology
There are many opportunities to take advantage of Blockchain technology, especially from the financial or financial sector. In the financial sector, blockchain technology is like a digital ledger that can be accessed by anyone, anytime, easily without the need for approval from financial institutions such as banks. This technology automatically makes all transactions safer and more transparent, thereby minimizing data misuse such as corruption or bribery.
Apart from being used in the financial sector, in 2018 McKinsey also created a blockchain opportunity table in various fields. Starting from the media, telecommunications, medical, agriculture, to property sectors.
Advantages of Blockchain Technology
More Transparent Systems: Blockchain technology is able to keep transaction histories safe and transparent. When making transactions using the blockchain, there is also public access that can be seen by all good people without having to have login access.
When compared with the current banking system, this pattern is certainly very different. Money owned and stored by customers can no longer be used by financial companies without the customer’s knowledge.
Better Data Protection: Technology uses systems that are verified by miners before being executed on multiple computers. The blockchain database structure is also append only or can only add and does not have an edit command. As a result, hackers cannot do hacking or social engineering to modify data.
Better Auditing: Auditing capability is one of the important functions of the blockchain. The reason is, everyone can see and track transaction data so that it is possible to know the audit trail of an asset. There is no more potential for embezzlement of corruption funds, because transaction data is public, immutable (cannot be edited, cannot be deleted) and append only (can only be added).
Eliminating Brokerage Fees: With blockchain, the role of the middleman has become even more irrelevant. Middleman or brokers who only add transaction costs are replaced by a consensus algorithm. All transaction recording needs to the verification process are directed to one immutable database access.
That is the discussion related to understanding what blockchain is, how it works, and its advantages. For now, there are still not many companies that can take advantage of blockchain at the same time. Especially when looking at the performance of Bitcoin as the largest cryptocurrency which still has weaknesses in terms of volatility, price, and existing infrastructure.