Author Topic: The Three Pillars of Block-chain Technology  (Read 119 times)

rakibul

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The Three Pillars of Block-chain Technology
« on: June 20, 2019, 10:48:13 AM »
The Three Pillars of Block-chain Technology

Pillar #1: Decentralization
Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity which stored all the data and you’d have to interact solely with this entity to get whatever information you required.Another example of a centralized system is banks. They store all your money, and the only way that you can pay someone is by going through the bank.
The traditional client-server model is a perfect example of this:
When you google search for something, you send a query to the server who then gets back at you with the relevant information. That is simple client-server.Now, centralized systems have treated us well for many years, however, they have several vulnerabilities.Firstly, because they are centralized, all the data is stored in one spot. This makes them easy target spots for potential hackers.If the centralized system were to go through a software upgrade, it would halt the entire system.What if the centralized entity somehow shut down for whatever reason? That way nobody will be able to access the information that it possessesWorst case scenario, what if this entity gets corrupted and malicious? If that happens then all the data that is inside the blockchain will be compromised.So, what happens if we just take this centralized entity away?In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank.


Pillar #2: Transparency
One of the most interesting and misunderstood concepts in blockchain technology is “transparency.” Some people say that blockchain gives you privacy while some say that it is transparent. Why do you think that happens?Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.
So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.Speaking purely from the point of view of cryptocurrency, if you know the public address of one of these big companies, you can simply pop it in an explorer and look at all the transactions that they have engaged in. This forces them to be honest, something that they have never had to deal with before.However, that’s not the best use-case. We are pretty sure that most of these companies won’t transact using cryptocurrencies, and even if they do, they won’t do ALL their transactions using cryptocurrencies. However, what if the blockchain technology was integrated…say in their supply chain?You can see why something like this can be very helpful for the finance industry right?

Pillar #3: Immutability
Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.Can you imagine how valuable this will be for financial institutes?Imagine how many embezzlement cases can be nipped in the bud if people know that they can’t “work the books” and fiddle around with company accounts.The reason why the blockchain gets this property is that of cryptographic hash function.In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as an input and run through a hashing algorithm (bitcoin uses SHA-256) which gives an output of a fixed length.
Let’s see how the hashing process works. We are going to put in certain inputs. For this exercise, we are going to use the SHA-256 (Secure Hashing Algorithm 256).


Reference:https://blockgeeks.com/guides/what-is-blockchain-technology/