The blockchain technology constructs a viable, decentralized record of transactions using the distributed ledger that allows the substitution of a single master database. This method keeps an immutable record of all transactions, back to the originating point of a transaction. This allows financial institutions to review all transaction steps and reduce the risk of fraud.
The blockchain promises to generate an alteration in the current computing paradigm as it has the potential to become the infrastructure catalyst for the creation of the decentralized app.
The blockchain technology has the potential to take the next-step evolution from distributed computing architectural constructs to a global database of data and interfaces. This technology integrates all kinds of machines and sources of data.
In this article, we will go through the 3 major perceptions of blockchain technology.
1. Smart Contracts
- The smart contracts are becoming vital for organizations as more and more companies are investing in blockchain technologies.
- Day by day, smart contracts are gaining traction rapidly.
- The benefits of Smart Contract Development include enforcement, low contracting, and compliance costs.
- A smart contract is a digital program that automates the accomplishment of business logic, agreements, and obligations.
- A smart contract can represent almost anything, for instance, an electronic warehouse receipt, an invoice, a bond, a futures contract, a unit of electricity, a unit of currency, and a share of risk.
- Each smart contract can write almost any sort of business logic.
- This business logic can be in accordance with the terms and conditions of the agreement.
2. Decentralized Databases Applications Consensus
- The blockchain technology has the potential to develop the decentralized databases apps consensus which consists of some unique characteristics of the technology.
- To secure the authentication of the source of the transaction, one can use cryptography through the hash codes.
- This helps in avoiding the duplication of the records of the same transaction.
- This eliminates the need for a central intermediary and breaks the paradigm of centralized consensus.
- In blockchain technology, there are different algorithms to achieve consensus about the validity of a transaction. Two most known algorithms are Proof of Work and Proof of State.
- Proof of Work (PoW)
- Proof of Work (PoW)
A block can have multiple transactions and in order to validate a transaction, to solve a block and to create a new block by solving a puzzle by brute force is necessary. The process of solving the block is mining and the one involved in solving the blocks are miners. Proof of Work does not only support Blockchain mining to validate transaction but also reward miners in the form of crypto.
- Proof of Stake (PoS)
In Proof of Stake, the developer of the new block is randomly selected and it depends on the blockchain user’s wealth unlike in Proof of Work. The block that the user creates is called forged and the user who created this block is known as a forgery. In Proof of Stake, the forger gets transaction fees as a reward.
3. Trusted Advanced Computing
- The integration of all the different concepts like the blockchain, decentralized consensus, and smart contracts, enables the spreading of the resources and transactions.
- Nowadays, if the central organizations and institutions are the trusted authorities, then in the future, smart contracts can codify a certain number of their central functions governed by decentralized consensus on a blockchain.
- Because of the role of blockchain as the definite validator of transactions, each peer can proceed and trust one another, as the rules of trust, authority, governance, compliance, contracts, agreements, and law live on top of the technology.
- One can create, dispense or execute smart contracts and smart property between consenting parties.
- Trusted computing is one of the key tenets of the new crypto-driven paradigm.
Nowadays, multiple companies are adopting the blockchain technology. For any organization to leverage the future scope of blockchain technology in 2019, needs to understand these basic and the three major concepts of blockchain technology. There are blockchain development companies like OpenXcell, that has a dedicated team of Blockchain Developers India who can deliver the best of experiences to its customers by keeping these concepts at the base of developing the blockchain-based app.