Blockchain technology has emerged as source for businesses who can take advantage of it to enhance their organization. In this article, we will show you about definition, history of Blockchain establishment, its mechanism as well as its applications in real life.
1. What is blockchain technology?
Blockchain technology – Source: Computer Rock
Blockchain is a public ledger of information collected via a system on the internet. That is how this information is recorded and gives blockchain the breakthrough potential.
What makes it unique is that there is no central authority in charge of the blockchain file or the data it contains. Instead, each computer keeps its own copy of the files, and any updates also require the approval of the majority of machines inside the system.
Blockchain is made up of “blocks”, each contains a piece of data. The most recent information is always added at the beginning of the chain, while the oldest data is placed at the bottom inside what is known as genesis block (the first block of a block chain).
Blocks are linked together by cryptography that is understood as complex algorithms, and which is the way chain is built. The relevant math means any change to existing data that will break the chain, so any attempt to change can be detected and rejected by the system.
In addition, Blockchain is a particularly promising and revolutionary technology as it reduces the risk, prevents fraud, and offers transparency in a way that is scalable for a multitude of uses.
2. Introduction to blockchain technology establishment
In 2008, Bitcoin was known as a virtual currency based on a technology platform formed by an anonymous person named Satoshi Nakamoto. The foundation of that technology is Blockchain. And he called it as “Open source P2P e-cash System”
In the year 2009, the first successful trading of Bitcoin took place between computer scientists Hal Finney and Satoshi Nakamoto.
One year later, Florida-based developer Laszlo Hanycez completed the first Bitcoin payment for 2 pizzas from Papa John. Hanycez transferred 10,000BTC worth about $60 at that time. And now, it is worth 80 million dollars.
In the next year, 1BTC = 1USD that means e-cash is now equivalent to dollars, and the EFF, Wikileaks, and other organizations started accepting Bitcoin as donations.
In 2012, Blockchain and e-cash were mentioned in popular TV shows such as “The Good Wife” bringing Blockchain into popular culture. And then the Blockchain magazine was the first issued by Vitalik Buterin.
In 2013, the BTC market capitalization has already exceeded 1 billion dollars, and reached the first milestone of $100/BTC. Moreover, Buterin published “Ethereum project” showing that Blockchain has other capabilities besides Bitcoin such as Smart contract.
After one year, video game company Zynga, D Las Vegas hotel, and Overstock.com started applying Bitcoin as payment. Additionally, Buterin’s Ethereum project raised public capital through an Initial Coin Offering (ICO), and raised more than 18 million BTC as well as opened up a new path of blockchain.
R3 – a group of more than 200 blockchain companies, was established to explore new ways that blockchain technology could be deployed. Furthermore, at that time, Paypal integrated with Bitcoin.
In 2015, the number of companies accepting BTC exceeded 100,000. And NASDAQ plus San-Francisco blockchain corporate chain collaborated to test stock exchange technology in private companies.
Then, in the year of 2016, IBM announced the blockchain strategy for cloud-based business solutions. Specifically, the Japanese Government recognized the legality of blockchain and cryptocurrency.
In 2017, one BTC got equal to 1000 dollars, and the market capital reached 150 billion dollars. JP Morgan CEO, Jamie Dimon said that “he believes in blockchain technology feature and votes for it as a vote of confidence from Wall Street”. And Bitcoin officially hit at 19, 783.21 dollars. At the same time, Dubai announced their government would be operated by Blockchain in 2020.
Those are the development of Blockchain over the nearly 10 years, and the blockchain technology feature will grow in a short period of time.
3. Blockchain technology mechanism
Blockchain Mechanism – Source: Jagran Josh
In terms of Block’s operation, there are three important concepts including block, miner, and node.
3.1. Block
Block is a chain of blocks and each has 3 basic factors including block data, hash, and block header.
- Block data is a 32-bits long field is called a nonce that numbers are generated randomly when a block is formed, then it creates a hash of the block header.
- Hash is a 256-bits number associated with nonce, and it must start with a large number of zero.
- Block header is used to identify a specific block across the entire blockchain and is continuously hashed to generate proof of work for the mining reward. A blockchain consists of a series of different blocks that are used to store information related to transactions occurring on the blockchain network. Each block contains a unique header, and each such block is defined by its individual block header.
3.2. Miner
Miners create new blocks on the chain through a process called mining. In a blockchain, every block has a nonce and unique hash value, but it also references the hash value of the previous block in the chain. So mining a block is not easy, especially on large chains.
Miners use special software to solve extremely complex problems in search of a nonce that produces an acceptable hash value.
As nonce number has 32 bits and hash value is 256 bits, so there are about 4 billions nonce-hash combinations that can be exploded in advance before finding out a match. When doing that, miners who found out “gold nonce numbers” and their blocks are added to the chain.
If conducting to change any previous blocks in the chain that requires re-mining, not only does that block change, but do all subsequent blocks change as well.
This is the reason why it is really difficult to manipulate blockchain technology. So let’s think of it as “ safety in algorithm” because finding out “Gold nonce number” requires the amount of time and power of calculating.
3.3. Node
One of the most important concepts of Blockchain technology is decentralization, and there is no computer or any organizations that can own the chain. Instead, it is a decentralized ledger through nodes connected to the chains. Nodes can be any types of electronic device that helps maintain copies of the Blockchain and keep the network running.
Each node has its own copy of the blockchain, and the network must calculately approve the blocks to be minded for the chain to be updated, trusted, and verified.
Because blockchain are transparent, every action in the ledger can be easily checked and reviewed. Each participant is given a unique alphanumeric identifier that displays their transactions.
Combining public information with checks and balances systems help Blockchain maintain integrity and create trust among users. Basically, Blockchains can be viewed as the ability to extend the trust through technology.
4. Blockchain technology applications
When it comes to Blockchains, we imagine to Bitcoin and other kinds of electronic money such as Altcoin.
But for a long time, Blockchain has been a part of technology of life and application in almost every industry. There are some of typical applications in reality from Blockchain:
4.1 Blockchain technology in E-commerce
For Blockchain, a series of problems in e-commerce will be solved like:
- Security: Due to its immutable nature, Blockchain keeps the information in the best security, not being lost, modified, or stolen.
- Cost-saving: Blockchain’s transparency helps parties in market transactions to have mutual trust leading to a reduction in the cost of advertising for investors.
- Transaction speed: Blockchain technology uses smart contracts to help e-commerce transactions much faster.
In addition, there are some popular Blockchain applications such as:
- Warranteer: creating a portal for customers to look up products and support when needed.
- Blockpoint or Loyyal is a smart solution in payment, integrating e-wallet, applying promotions, earning loyalty points, and more.
4.2. Blockchain technology in Supply chains
Supply chains always face transparency and complexity at all times. Due to the nature of the supply chain is a series of processes of production, transportations, and payment,… with the participation of many human resources as well as departments to bring a product from the starting material through manufacturing to end-consumer.
And Blockchain is considered a revolution in this industry. When application of Blockchain distributed ledger technology will make sharing information easier and faster, increasing customers experience and reliability as well:
- Helping traceability of goods, improving transparency
- Supporting transactions fasters, saving cost
- Securing data safely
- Companies can manage goods well
4.3. Application of blockchain in education
In education, blockchain technology brings beneficial things to support so much like:
- Managing the learning process:
Due to the use of technology to store and transmit information by blocks and expand over time, Blockchain will help to store the entire process, learning results, as well as the skills and experiences of users during operations.
- Monitoring learning performance:
By using smart contracts in Blockchain, it will help teachers monitor students’ performance and make public, transparent, plus fair assessment. At the same time, the school can also assess the expertise and teaching capacity of educators through lectures that are prepared and posted publicly on the school’s educational background.
- Bridge between students and recruiters:
Blockchain will be a bridge between students and talent recruiters, which helps students who can approach many companies when they still stick with school. And vice versa, recruiters are able to find young talents from universities, or colleges.
To be honest, this is some knowledge and applications that Blockchains technology helps our life better. Moreover, Blockchain technology companies are mushrooming to meet the demands of businesses like BAP that can help businesses from requirement stage to the output products with Blockchain technology, or more including Big Data, AI, SAP,…If your business has a plan to build one of them, please contact us.
