Preface
How many pillars of blockchain technology have; first, we introduced blockchain network technology, then its pillars. It is a decentralized distributed ledger that keeps a record of transactions, and it consists of blocks that are connected with each other by nodes or computers. The first famous project created using blockchain technology is Bitcoin, a coin of the crypto world. Blockchain technology is widely used to create projects like health, real estate, and social media apps.
Pillars of blockchain technology
Transactions are recorded in a block, and the respective block is counted consecutively to the chain of blocks after the nodes’ verification (Nodes, Miners, or Computers). A block consists of three terms: Data, Hash, and Pervious Hash. And the other two main pillars of blockchain technology are “Consensus algorithms” and “Cryptography.” The detail of the following pillars is as follows:
Blocks
After a transaction or series of transactions have been added to the blockchain and verified, a block is a data record containing information about those transactions. Blocks are added to the blockchain in a chain-like, documented order.
i. Data
The phrase “blockchain data” refers to the electronic records of transactions stored on the blockchain. This data is distributed, meaning different network nodes or minors maintain data.
ii. Hash
A hash is an identifiable alphanumeric string produced by a cryptographic algorithm. Every block on the blockchain generates a unique hash based on the information it contains. To ensure the accuracy of the data and prevent tampering, we assume the hash functions as a digital fingerprint.
iii. Previous Hash
The block’s hash before the one in question is the previous hash on the blockchain. By including the previous hash in every block, the blockchain connects each block to form a chain of blocks. The blocks can’t be altered without the chain being broken.
Consensus algorithms
CAs are used in blockchain technology to ensure everyone on the Network agrees on the blockchain’s current state. These algorithms ensure that every node on the Network sees the blockchain consistently, verifies transactions, and adds new blocks to the blockchain.
Cryptography
It is a method for encrypting and decrypting data to safeguard its security and privacy. Blockchain technology uses several cryptographic techniques, such as digital signatures, public-key cryptography, and hash functions, to safeguard the security and privacy of the data on the Network. Encryption also stops unauthorized users from accessing and using the blockchain network.
The process of execution of Blockchain Network
Participants initiate a transaction
Any user connected to the Network can initiate a transaction by creating a digital transaction record with the transaction amount’s data.
Verification of the transaction
The other network users verify a transaction after it has been started. These participants use complex algorithms to validate the transaction and ensure it.
Adding the transaction to a block
After the transaction is confirmed, a block of verified transactions is added. Each block has a distinct digital signature that prevents forgery.
Adding the block to the chain
A block is created and then added to the existing blockchain. A chain of blocks known as the blockchain contains a record of every transaction that has ever occurred on the Network.
Consensus mechanism
A complex mathematical equation was given to every node in the Network; under the consensus mechanism, the nodes verified the transaction using several methods, including proof-of-work and proof-of-stake.
Data privacy and security
The blockchain depends on cryptography to secure the sensitivity and security of the information. Each participant has a private and public key, but only the private key can initiate a transaction. After consensus, every node in the Network adds the block to the project.
History of Blockchain Technology
Stuart Haber and W. Scot Storneta created the decentralized model based on blockchain technology in 1991. Computer scientist Nick Szabo developed the Bitgold digital currency system in 1998. To safeguard the implementation of cryptographic chains of blocks, Stefan first put forth his idea in 2000. In 2008, a person or group going by the alias “Satoshi Nakamoto” first introduced the concept of blockchain technology. They explained how to make a digital currency that can work decentralized in a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
Types of blockchain technology
Blockchain technology eliminates the need for a central authority or intermediary to verify and facilitate transactions. There are three significant types of blockchain technology, as described.
1. Public Blockchain
It is a blockchain network that is unrestricted, decentralized, and accessible to every user. All the network transactions are open, so the users can access them to read, write, and participate. Cryptocurrencies such as BTC and ETH are examples of the respective Networks.
2. Private Blockchain
A secure blockchain network with limited user access is known as a private blockchain. Organizations continually use it to boost the effectiveness and security of internal processes. Private blockchains are sealed, meaning only approved users can read, write, or interact with the Network. Private blockchains are frequently used in real estate, finance, and healthcare sectors because the clients can’t access the data, but management can.
3. Semi-private Blockchain
A merger of public and private blockchains is known as a semi-private blockchain. Several participants or organizations collaborate to create a standard blockchain network. Semi-private blockchains are generally used in sectors like supply chain management, where numerous parties must share data.
Blockchain Technology & Bitcoin – How Many Pillars of Blockchain Technology Have
The first successful implementation of blockchain technology was Bitcoin, which later inspired the development of numerous other blockchain-based initiatives and programs. Bitcoin, the original digital currency, was the first to use blockchain technology. It was developed in 2008 by someone “Satoshi Nakamoto,” who is unknown. The Bitcoin network was developed to support peer-to-peer transactions without a centralized authority, acting as the primary transaction validation and record-keeping mechanism.
The Bitcoin blockchain operates by creating a decentralized ledger of all Bitcoin transactions. When a transaction is initiated in the Bitcoin network, miners use complex cryptographic puzzles to verify the transaction. After confirming the transaction, the block is added to the current blockchain. The blockchain is protected from malicious hackers and kept in a compatible state across the entire Network with the help of a consensus mechanism.
5 Benefits of Blockchain Technology
1. Decentralization
Blockchain technology is decentralized, so no one organization controls the Network. As a result, there is less chance of a single point of failure, and the Network is more resistant to attacks.
2. Transparency
Since every transaction on the blockchain is visible to everyone using the Network, there is a high level of accountability and transparency. This openness is especially beneficial in industries where trust is essential, such as finance, healthcare, and supply chain management.
3. Security
Cryptography is used in blockchain technology to ensure the data’s security and privacy. After that point, a transaction added to the blockchain cannot be changed without the Network’s approval.
4. Efficiency
Blockchain technology allows for automating and streamlining multiple processes, resulting in quicker and more efficient operations that could increase productivity and reduce project costs.
5. Cost Reduction
The transaction speed of data is fast, which reduces the transaction process cost, and cloud computing companies charge a hefty fee from users, so using blockchain technology reduces the cost.
Cons of Blockchain Technology
Scalability
One of the most significant issues blockchain technology faces is scalability. As the number of transactions on the Network increases, transaction processing may become slower and more expensive.
Energy consumption
Blockchain technology, especially proof-of-work consensus algorithms, requires a lot of computational power and energy. The Network might damage the environment and lessen the sustainability of the technology.
Complexity
Because of its complexity, blockchain technology can be complicated for non-technical users to use and comprehend.
Regulation
Blockchain technology regulation is still in its early stages. The Network could result in uncertainty regarding the law and regulations, especially in industries like finance and healthcare, where compliance is essential.
Conclusion
How Many Pillars of Blockchain Technology Have; blockchain technology can completely transform various industries by providing a reliable, safe, decentralized, and transparent data storage and transfer method. Blockchain technology allows the process of automation that can lead to cost savings and increased productivity. A few problems the technology still has to solve include scalability, energy consumption, complexity, and regulation. As technology advances and matures, more people will likely adopt and integrate it into various industries. A particular type of blockchain technology will be used based on the current use case and the parties needs. Numerous real-world applications already use blockchain technology, and its potential applications are still being researched.
FAQs:
1. What is blockchain technology?
Blockchain technology is an open and secure digital ledger that records transactions. Several network users examine and approve each transaction, and once it has been added to the blockchain, it cannot be changed or removed. Digital currency Bitcoin makes use of blockchain technology to enable peer-to-peer transactions that are safe, open, and decentralized. Ethereum is another example of blockchain technology and a decentralized development environment for creating decentralized applications. Ethereum uses blockchain technology to enable smart contracts, which automatically execute when specific conditions are met.
2. What is the main purpose of Blockchain?
Blockchain technology has allowed storing and transferring data securely and openly. Blockchain uses cryptographic methods to create a decentralized digital ledger immune to manipulation, providing high transparency and accountability. In general, the main objective of blockchain technology is to provide a secure, transparent, and decentralized method of data storage and transfer and to create an environment where transactions and other kinds of interactions can take place without any sense of trust.
3. What are 3 uses of Blockchain?
- First is creating the cryptocurrencies such as Bitcoin; the ability to carry out peer-to-peer transactions without a centralized authority is the most well-known application of blockchain technology.
- Supply chain management is the second domain that uses the Network to develop an immutable record of transactions of products by the retailers and sellers in the market. As a result, supply chain management may become more efficient, affordable, and transparent.
- Blockchain technology can create smart contracts, self-executing agreements that come into force when certain conditions are met. Many business processes can be automated with smart contracts, which are transparent, unbreakable, and enforceable.
4. How is blockchain used in real life?
Numerous industries are using blockchain technology in a variety of practical applications. Here are some examples:
Healthcare:
Blockchain technology can store and share medical records openly and securely, protecting patient privacy and granting doctors and other healthcare professionals on-demand access to vital information.
Voting:
By utilizing blockchain technology, a secure and transparent voting system can be created, ensuring the confidentiality and integrity of the voting process.