(October 2024) Blockchain theory, its future, uses, pros and cons.

What is blockchain and its features?

It is a decentralized digital ledger that records and stores the data with security in a network of computers. Data is recorded and stored in a way that remains secure, transparent, immutable, and resistant to tampering. Data is recorded in blocks, and each block has the data. Further blocks are linked in a chain and any new block will be added at the front of the chain.

Data is stored in blocks which are chained together by cryptography techniques. Therefore it is called a blockchain.

It is a digital record-keeping technology. Each computer in the blockchain network has a copy of the ledger, where all transactions are recorded, validated, and updated simultaneously. This prevents a single point of failure, which generally happens in a centralized data recording system like a bank server, etc.

Each node or computer device in a blockchain network is identical and all the records of the entire transactions in the network are available at each node.  If at one node, anyone attempts to delete or change the data, other nodes will not allow it and the security of the system will remain intact.

Various types of data may be stored on the blockchain, however mostly it is used as a transaction ledger.

Virtually anything can be traded and tracked on the blockchain networks and it will reduce the cost and risk. It facilitates the recording of transactions and tracking of assets. The assets may be tangible (car, house, land, cash, etc.) or intangible (brandings, intellectual properties, copyrights, patents, etc.).  Any type of information (what, when, who, how much, etc.), even the temperature of food shipment can be recorded in a block.

In a cryptocurrency like Bitcoin, blockchain is decentralized. It means that all users collectively have control over it, instead of a single or selected user.  Decentralized blockchains are immutable, which means that the data is permanently recorded in the blockchains and irreversible.

It maintains transparency and trust because all the records are viewable to all users.

Some properties of blockchain are similar to traditional databases or spreadsheets where information is entered and stored. The main difference exists in the structure of the entered data and the method of accessing the data.

The data recorded in a block is immutable ( can not be altered). However, trust is needed at the point where data is entered by the users or programming.

The task of entering and accessing the data from the blockchain is executed by the programs called Scripts. Later on, it is saved and stored in another place.

Decentralized system of blockchain:  It is a specific feature of the blockchain system. The running software of the blockchain allows the data in the database to spread out among various nodes of computers or devices that are connected to a blockchain network. The redundancy (duplicate, replica) and fidelity (faithfulness) of data are maintained among the nodes connected to the networks. For example - if anyone tries to alter the data on a node, other nodes will not allow it due to dissimilar block hashes. In this way, no one can change the data of the blockchain. Due to this distribution of data, the encrypted proof is maintained with each node and it is irreversible. It is not only in the case of transactions, private blockchain can maintain other various encrypted, irreversible proof of data for legal contracts, state identification, company information, etc. Most of the blockchains do not store such information directly, however, it is done through a hashing algorithm and it is called a token in the blockchain. This feature does not allow any node to command over the networks, it avoids any degradation in the functionality of the blockchain network.

Immutability: It means that recorded data can not be deleted edited or changed. No one,  even the creator node can not tamper with data. If a user finds that an error occurred in the recorded data, he can not reverse the data, he will create a new block of data to correct the mistake and both blocks will be visible to all nodes and devices.

Blockchain Transparency: As we know blockchain is a decentralized system, which means updated transaction records are available with every node in the network.  We can see the live transactions, as well as download and inspect the record. If a Bitcoin is generated, a block will be added to the chain and we can track it. It shows the transparency of the blockchain system. Example: If a cryptocurrency exchange is hacked and a lot of cryptocurrency is transferred by the hacker, it results in heavy losses to investors.  The hacker will remain anonymous but his/her wallet address will be available in the records of the blockchain. So we can track the record of cryptocurrency transferred by the hacker.  Since the record stored in the blockchain of most currencies is encrypted, only the user can reveal his identity. Therefore, we can track the transaction details of hackers but not their identity. It shows that the blockchain system is transparent due to the availability of all transaction records at each node but user identity will remain

Know something more about blockchain system:
Know about a block: Bits of data are stored in a file which is called a block. A block in a blockchain has 04 main headers as  given below:
1. Previous hash It contains metadata (it is data that tells us about other data) such as the timestamp of the mining process and a hash of the previous block. This hash address locates and verifies the previous block.
2. Data Section: It is the main part which contains the actual record of transactions or smart contracts.
3. Nonce:  It is a cryptographic arbitrary number to differentiate the hash address of a block. The explanation about the Nonce is given in another section of this blog.
4. Hash address of its own block:  All information from the above three sections (Previous Hash, Data section, and Nonce) is transmitted with a hashing algorithm and it gives a 256-bit unique output containing 64 characters, which is a unique hash value and called the hash or hash address of its own block. It is a cryptographic value that will represent the entire block and be used for verification.
Block time: It is the time taken to generate a new block in a blockchain. It varies from one blockchain to another. Block time may be a few seconds or even more than an hour. If the block time is short, confirmation of transactions will be faster but chances of conflicts are higher. If the block time is longer, confirmation of transactions will take more time but at the same time, chances of conflicts will be lesser.
What are hashing and encryption in blockchain technology? When a document containing some information is sent through a program on a computer, it is converted into a string of letters and numbers. This process is called hashing and such a string with numbers and letters is called hash. This hash or hash value is added at the beginning of the second document and new information is entered into the second document and a new hash value is created through the same process as in the first document and this second hash value will be added at the beginning of the third document and so on. This creates a chain of encoded documents and it is immutable, meaning cannot be altered.  So we can say that Hash may be treated like a digital fingerprint or digital signature. SHA256 algorithm is used for hashing and encryption to secure all the information as given below:
Address (Public key) of sending party	Address (Public key) of receiving party
Digital details of transactions	Private key of receiving party
The above-mentioned information encrypted by using the SHA256 algorithm, is called hash encryption. This encrypted information is transmitted across all nodes in the blockchain network. After verification, it is added to the blockchain in the form of a new block. Immutable information simplifies the authentication of the sender and receiver.
What is mining? Mining is a process to generate a new coin for the verification of new transactions. It is a complicated mathematical puzzle that is attempted to solve by millions of computers across the blockchain network. It consumed a huge computational power. It verifies and secures the blockchain. As compensation, computers in the network are rewarded with new coins. Miners maintain and secure the blockchain, and blockchain awards the coin. In turn, coins give an incentive for the miner to secure the blockchain. Therefore it is called a vitreous (beneficial for all) circle. In other words, we can say that the process of adding transaction details to the public ledger of a blockchain network is called the mining process. Though the word mining is initially linked with Bitcoin, it is used by all blockchain technologies.
What is Proof of Work (PoW)?  With the help of a Computational algorithm, miners try to solve the complex mathematical puzzle. It is called Proof of Work (PoW). Miners try to find out the right value of hash to meet the predetermined conditions.  The transaction completes when the predetermined conditions are met. The miner who solves it first gets a reward.
What is Proof of Stake (PoS)? It is an alternative algorithm to secure the blockchain. PoS does not require mining, instead, Some coins are locked up by users for some time and it will entitle them to get the reward.
What is a hard fork? If a fundamental change in the protocol of the blockchain occurs, and all nodes do not agree with the change, a permanent divergence in the blockchain history is found which creates two separate chains, and it is called a hard fork. Due to a hard fork, a new cryptocurrency can emerge or an existing one may be split into two, and consensus among all users is needed to resolve the issue.
What is finality? Irreversible confirmation of a transaction in a blockchain is called finality.  When the addition of a block is confirmed by the blockchain network. It becomes immutable and irreversible. This ensures the integrity of the data.
What is openness in a blockchain? A blockchain network is open to all, anyone can join the network, validate the transaction, and add a new block to the blockchain. It is called the openness of a blockchain.  Inclusivity, transparency, and innovation enhance the participation of various users due to openness.
Difference between Blockchain, Bitcoin, and Cryptocurrency: Please don't get confused about the three above terms. Blockchain is a technology that works on the principles of cryptography, decentralization, and consensus. Cryptocurrency is an application of Blockchain technology. In which virtual currency is developed and used. There are several cryptocurrencies being used in the world. Bitcoin is the first cryptocurrency which started in 2009. It is still popular and covers more than 50% of the cryptocurrency market.
Difference between Traditional database and blockchain database: Blockchain database management systems have special features that traditional database management systems do not have.  Some of the differences are listed below:
Traditional Database	Blockchain-based Database
Data is stored in lines, columns, tables, files, etc.	Data is stored in blocks that are digitally linked together like a chain.
Centralized control exists. It may be controlled by a company, government, or individual. Therefore chances of manipulation of the data are much higher.	No single control.  It is a decentralized and trusted system. The data is immutable. It is a peer-to-peer network.
One user can not see the details of others' transactions. A lack of transparency exists.	Transparency exists. All users have a copy of the entire transaction in a blockchain network.
Most of the database systems can edit and delete the data. Trust deficit exists.	It is an immutable system. Once a date is generated, it cannot be reversed. We can feel almost 100% trust.
Difference between Blockchain and Cloud services: Some of the features of Blockchain and Cloud services are listed below:
Blockchain	Cloud
It is a decentralized system. Hence it is distributed across the network computers.	It is a centralized control system and its data is stored in a central server in one place.
Its data is immutable, and can not be edited, altered, or deleted.	The possibility exists to edit, alter, or delete the data.
To join a public blockchain network, the user has to provide hardware resources to store a copy of the ledger.	It provides computing services for online access.  Example: Software as a Service (SaaS). Product as a Service (PaaS). Infrastructure as a Service(IaaS).
Users can utilize the server services from the cloud also.	Service providers manage and maintain their hardware and infrastructure resources.
Complete Blockchain as a Service (BaaS) is also offered by the cloud service provider.	Clients can access these services on the Internet.
Blockchain service may be considered as a subset of cloud service.	It provides many more services other than database management.

Working principle of blockchain: The working principle of blockchain technology is very complex. A brief idea is given here:

Recording of transactions: The digital data regarding the movement of a physical or digital asset from one party to another is stored in a file which is called a data block. The movement of transaction records in a data  block can have various details: Parties involved in the transaction. Type of transaction. Transaction time. Locations of the users. Reason for the transaction. Value of assets exchanged. Preconditions are fulfilled during the transactions.

Gain consent: Most of the users of the blockchain network must agree that the recorded transaction is valid. Rules of validation may vary from one network to another, however, it is pre-decided generally.

Linking of blocks: Once the consensus among the participants is reached, transaction details are recorded in blocks just like pages of a ledger book. Moreover, a cryptographic hash is generated and appended in the new block which makes a link( chain) between two consecutive blocks. Any tampering (knowingly or unknowingly ) with the data will change the hash value and it will be detected and rejected. Any new block verifies the hash value of the previous block and in this way,  the complete chain is verified and secured.

Sharing of the ledger: The system distributes the copy of the ledger to all participants and makes it a shared database. It is called Distributed Ledger Technology (DLT).

Transaction process of a blockchain: A specific process is followed in the transaction process. Different blockchains have different transaction processes. Example: If the transaction process of the Bitcoin blockchain is initiated from a cryptocurrency wallet, a sequence of events is started by an application that provides an interface between the cryptocurrency wallet and blockchain. Transaction details are sent and stored in a memory pool. The stored transaction details remain in the for picking up by a miner. Thereafter, the stored transaction details are entered into a block and when the block fills up with the transaction details, it is closed and the mining process starts here. Since every node in the network is working for different transactions, therefore they propose their own blocks and work on them to find a solution for the difficulty target using nonce (nonce is an abbreviated form of number used once). In the block header, there is a field for the nonce value. Its value can be changed and increased incrementally with each mining attempt. If the resulting hash is not equal to or less than the target hash,  a value of 1 is added to the nonce. In this way a new hash is generated and so on. The nonce rolls over for about 4.5 billion attempts and it takes less than 1 second and uses another value called the extra nonce as an additional counter. This process continues until a valid hash is generated by the miner, then wins the race and receives the reward. Generating these hashes until a specific value is found, consumes a huge amount of computation power and a lot of energy. After completion of the transactions, the block is closed. However, this block will be considered confirmed only after validating the five following blocks. Network takes a total of 1 hour for the confirmation of this new block because one block consumes 10 minutes and here we have a total of 6 blocks (1 current block + 5 following blocks) for processing. Note: All the blockchains do not follow the same process. For example, the Ethereum network selects randomly one validator from all users with Ether staked to validate the blocks. After that, it is confirmed by the network. Compared to the Bitcoin transaction process, it consumes less energy and works faster.

The technology used in the blockchain: Various technologies are used in the creation of a blockchain, some of the technologies used in the blockchain are listed below: 1. Cryptographic keys. 2. A peer-to-peer network containing a shared ledger. 3. A computing device to store the transactions and records of the network

Components of the blockchain network: The architecture of a blockchain network has various components. Some of the components are listed below:

Distributed ledger: It is spread across the network of computers. In blockchain technology, multiple copies are saved on many machines and all the copies saved on different machines must be identical and valid. Therefore, a blockchain is called a distributed database or ledger that is shared with each and every node or computer device of a blockchain network.

Smart contracts: It allows the blockchain to be used for more than a database. The introduction of specific codes into the blockchain makes it a smart contract.  It means certain terms and conditions are recorded for the execution of transactions when these terms and conditions are met, the transaction is executed automatically. It is called a smart contract.  Such types of business contracts are self-managed without the help of third-party assistance. It is used in the transfer of bonds, payment in travel insurance, etc. Example - A logistic company will make a payment automatically when the goods reaches the destination.

Consensus Mechanism: It allows the computers of a blockchain network to agree on the state of the ledger. The consent of each and every participant in the network is needed to validate the block. If even a single node does not validate it, the block will be rejected and not recorded in the network.

Cryptographic keys: In the blockchain network, 02 keys are generated. One is called the Public key which is identical to all users of a network. Another key is called Private key which is unique for every user. After using both keys together in the correct way, users will be allowed to access the network.

Use of keys in the transaction  process: Example: Two persons want to perform a transaction with cryptographic keys (Private and public keys). The first person will attach the digital information for the transaction to the public key of the second person. Togher all the data will make a block.  The block will contain a digital signature (Hash), a timestamp, and other relevant information. However, it should not contain the personal information or identity of the persons doing the transaction. Then, the block is transmitted across all the nodes of the network. When the receiving person uses his private keys and matches them with the block, the transaction of the block is successfully completed  now. The transaction may be related to finance, property, vehicle, or any assets.

Classification of blockchains: Different types of  blockchain networks are used and some are  listed below:

Public Blockchain network: Anyone can join and participate in a public blockchain network. No permission is required from anyone, so such networks are permissionless. All members of the blockchain have equal rights to write, read, edit, and validate the transaction. Most of the public uses public blockchain networks to exchange and mine cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc. Compared to other types of networks, it provides weak security and almost no privacy for transactions.  Moreover, Public Blockchain networks consume more power compared to other networks.

Private Blockchain Network: Fundamentally it is a decentralized and peer-to-peer blockchain network, but It is accessible by only a group of persons like the management team of a company or organization which governs the network by allowing specific participants. It boosts trust and confidence among the participants. Since it is managed by a single organization, therefore, it is also called a managed blockchain network. The concerned authority has the power to allow access to the selected participants and define the rights of participants. A private blockchain is also called a semi or partially decentralized system because it allows limited participants with limited rights. It is more secure than a public blockchain network. A corporate firewall is generally used to stop unauthorized access. Ripple is a private blockchain network that works for digital currency exchange.

Permissioned or Hybrid Blockchain Network: Public or Private blockchain networks can be converted into permissioned blockchain networks by placing instructions to take permission for participation in the network. Restrictions may also be placed for transactions. In this way, specific data may be restricted and the rest of the data may be made public. It enhances the security, trust, and confidence of participants. Example- a hybrid blockchain network can grant the public access to the digital currency exchange but the bank-owned currency may be private and access is allowed to the specific group(s).

Consortium blockchain network: Such types of networks are maintained and governed by a group of organizations, and needed restrictions are placed by them for access and transactions. Many organizations or companies, if they have common goals and benefits from shared responsibilities, prefer to opt for the consortium blockchain network. Example: Global shipping business consortium network: it is a not-for-profit consortium blockchain network. Its aim is to digitize the shipping industry and enhance the collaboration among maritime industry operators.

Sidechains: These are the branches of the main blockchain for the experiment with new features and applications without affecting the integrity of the main blockchain. Side Chains run parallel to the main blockchain and allow additional functionality and scalability. These side chains are also used to handle the transactions of the main blockchain to reduce congestion and increase the scalability of the main blockchain.

Blockchain layers: In this method, multiple chains are created on top of each other. Each layer may have its own consensus mechanism, rules, and functionality to interact with other layers.  Greater scalability may be ensured due to the distribution of transaction processes in parallel layers. Example: The Bitcoin blockchain has a layer of lightning network on the top.  It creates a payment channel between the users for faster and cheaper transactions.

Blockchain protocols and platforms: Blockchain Protocols are a set of rules which govern all the activities of the network including investors, voters, stakers, consensus, network participations, execution and recording of the transaction, security, transparency, etc. Protocols are the foundation layer of a blockchain platform. Blockchain platforms are the shared digital ledger. With the help of protocols and technology, blockchain platforms allow various activities to the user like transactions, smart contracts, application development, etc. All the activities are immutable, secure, and transparent. Many blockchain platforms are in use, and  some are listed below:

Bitcoin: It is the first blockchain platform and is still in use. It uses the Proof of Work (PoW) algorithm to validate transactions and add them to the blockchain in the form of a new block. It was the first cryptocurrency which was introduced in 2009 and is still popular.

Ripple: It is very similar to bitcoin and introduced in 2012. It is the second-largest cryptocurrency by market capitalization.

Hyperledger fabric: It is an open-source project and can be effectively and efficiently used for customizing private blockchain applications, permissioned networks,  and smart contract-related contract-related decentralized hosting & storage of applications. Identity management and access control are its special features which makes the protocol suitable for various applications like tracing and tracking of supply chains, trade finance, loyalty, rewards, and clearance of financial asset settlement, etc. It is widely used by the finance and manufacturing industries.

Ethereum: It was initially described on paper in 2013 by  Buterin who was a programmer. He had the opinion that Bitcoin needed a scripting language for the development of applications. He created a new platform called Ethereum which is simpler than Bitcoin. It is an open-source blockchain platform that can be used by people to make public blockchain applications.  It introduced the development of smart contracts and decentralized Applications (dApps). It is popular among large community developers due to its various flexible features. It is designed for business use cases. Its native currency (Ether) is used to power the platform and for the compensation of participants.

Corda: Like hyper ledger fabric, it is an open-source project. It is designed for business purposes. Interoperable blockchain networks following strict privacy during transactions can be built with the Corda protocol. Its smart contract technology makes it possible to transact directly with value. Most of the Corda protocol users are financial institutions.

Quorum: It is again an open-source platform derived from Ethereum. It is especially suitable for a private blockchain network and consortium blockchain network. We should remember that a private blockchain network is controlled by a single organization and a consortium blockchain network is controlled by a group of organizations with pre-decided access in different manners.

OpenChain: It is an open-source blockchain platform.  It is designed for organizations to manage and store digital assets. The governing rules used for the ledger will be decided by an administrator and followed by all users for transactions.

Know about blockchain as a service:

It is provided by a third party in the cloud. Infrastructure and blockchain-building tools are provided by cloud-based platforms like Azure. Users can develop, host, and use blockchain applications, smart contracts, and other digital services by customizing the provided blockchain technology. It is a managed blockchain service that makes the faster and more efficient adoption of blockchain.

AWS Blockchain services: It provides customized tools to support our needs. AWS stands for Amazon Web Services. Users can utilize these tools to make many things from a centralized ledger database. The centralized ledger database maintains an immutable record of data transactions to various parties.  It is a fully managed blockchain that eliminates the involvement of third parties. It provides many validated blockchain solutions supported by almost all major blockchain protocols like Hyperledger, Corda, Ethereum, Quorum, etc. Due to various available options, blockchain and ledger applications can be developed faster, more efficiently, and easily.  Some of the AWS blockchain services are listed below:

AWS Quantum Ledger Database (QLDB): It is a fully managed ledger database.  Immutable, transparent, and cryptographically verifiable transaction records are provided by QLDB. Any change in the data will be stored accurately in a proper sequence.  For storing the changes mentioned above, a built-in general is provided by QLDB. The users can add the data in built-in general but can not edit or delete it because built-in general is provided only for appended purposes.

Amazon Managed Blockchain (AMB): This fully managed service can be used for instant and serverless access to multiple blockchains. It helps to build Web 3 applications on both public and private blockchain networks. It supports the following blockchain protocols: Ethereum, Bitcoin, Polygon, Hyperledger Fabric.

Blockchain evolution and its history: Some of the facts regarding  blockchain and its history are listed below:
Its beginning may be considered in 1970 when Ralph Merkel, a computer scientist patented the Hash trees. It is also called Merkel trees which is derived from his name.
With the help of cryptography, these hash trees, which are computer science structures, can store the data by linking the blocks.
Real blockchain history started in 1990 when two scientists ( Stuart Haber and W. Scott Stornetta)  successfully used the Merkle trees and implemented a system in which time-stamped documents could not be tampered with.
First generation evolution: (Bitcoin and other cryptocurrencies) In 2008-2009, an individual or groups of individuals, real names or names not yet known, however fictitious name Satoshi Nakamoto,  introduced the blockchain network in its modern form of Bitcoin. It used a 1 MB file for data storage in a block for Bitcoin transactions.  Most of the main features of the Bitcoin blockchain network are used today also. Later on, various virtual currencies came into existence.
2011  Bitcoin was given parity with US$ (1 BTC = 1 US$). Bitcoin was accepted as a donation by a few companies like Electronic Frontier Foundation, Wikileaks, etc.
2013 The market capitalization of Bitcoin crossed the level of US$ 1 billion and the value of 1 BTC reached US$ 100.
2013 Second Generation Evolution: (Smart contracts) After some years of the first-generation evolution of cryptocurrency, Scientists, engineers, and mathematicians developed a new application of blockchain in the form of Smart Contracts. In smart contracts, automatic payment is done when some pre-decided conditions are met. The developer of Ethereum used the smart contracts application of blockchain technology in asset transfer transactions.
2013  The first known Non-Fungible Token (NFT) came into existence.
2015 Number of business platforms accepting Bitcoin crossed 100,000. NASDAQ and a San Francisco blockchain company tested the blockchain technology for trading shares.
2016 IBM introduced a blockchain strategy for cloud-based business solutions. First time more than 126000 shares of Overstock.com (an online retail company) were publicly traded by using the blockchain network.
2018 Blockchain-based banking platform with Citi and Barclay banks was developed by IBM. The entertainment ticketing software and services company (Ticketmaster) bought a blockchain technology provider company (Upgraded) for the conversion of traditional tickets into secured and interactive digital assets.
2019 The Chinese president welcomed the Blockchain technology and it was announced that the Chinese central bank is working on its own cryptocurrency. A digital wallet company; Bakkt, was created by New York Stock Exchange (NYSE) to include crypto trading.
2020 PayPal allows its users to buy, sell, and hold cryptocurrencies. The partnership between Theta Labs (a blockchain company) and Google Cloud allows Google Cloud users to deploy and run the nodes from the Theta blockchain network. Bahama launched its central bank digital currency and ranked the first country in the world by doing so.
2021 The rise in the popularity of Web3 implementation was recorded.
2022  A proposal for the safeguards of stablecoin holders was submitted by the UK government. Chain analysis; a blockchain analysis company identified around 200 cases of hacking causing a loss of US$3.8 billion.
2023 The bad news of fraud was recorded again in 2023. However, businesses based on blockchain applications are still moving ahead with caution.
It is estimated in September 2023, that more than 9000 publicly traded cryptocurrencies exist in the market.
2024 Bitcoin prices hit an all-time high of  US$ 73750 in March 2024. Russia will legalize the minting of cryptocurrencies w.e.f. November 2024.
Third generation evolution- its future expansion: Blockchain technology and its applications are in the developing stage. Rapid growth is expected shortly. Developers are engaged in solving the limits of scale and computation. Various applications of blockchain technology are emerging and will further expand its scope.
The blockchain promises to provide transparent and secured transactions without the need for intermediaries, which will potentially affect the daily operations of various businesses. Some of the important technologies like NFTs, AI, IoT, and Metaverse will have a great impact on blockchain applications.
It is estimated that the business value of blockchain will be increased like below:
By 2026	US$ 360 billion
By 2030	US$ 1 to 3 Trillion

Use Cases and applications of Blockchain technology:  There are various use cases and applications of blockchain technology. Some are listed below:
Various Cryptocurrencies: Blockchain technology is playing a very important role in cryptocurrency as mentioned in my last blog on this website. It maintains the decentralized and secure records of each transaction.
Decentralized Finance (DeFi):  It is a financial framework based on the Ethereum blockchain network. As the name suggests, there is no centralized authority to control the network.
Non-Fungible Tokens (NFTs): It is a digital token recorded on a blockchain network. It is used to certify the authenticity and ownership of a physical or digital asset.
It has given new life to the world economy by facilitating microloans and micropayments for underprivileged society.
Transport aggregator Uber and renting holiday homes by Airbnb, etc, use blockchain applications. Blockchain applications are playing a role in the payment of tolls, parking fees, etc.
Use in the industries: Blockchain technology can be used in any industry to make the data immutable. It means that the data can not be altered. It can be used in transactions, votes in elections,  goods inventories, state identifications, miscellaneous works at home, office, etc. Since the data recorded in the block can not be altered, it reduces the need for trusted third parties like auditors or human interface who can increase the cost of the project and make mistakes (human error). It has a very high demand in several projects. Various blockchain platforms run by IBM are used in many industries.
Various major companies are trying to implement blockchain technology for different uses. Some of the companies are listed below:
Walmart	Pfizer
AIG	Siemens
Unilever	Home Depot
IBM
Food industry: The food industry (supply and chain) has witnessed the accidental mixing of some hazardous materials into food items. Moreover, various infections like E.-coli., Salmonella, and listeria occurred due to food adulteration. Only after weeks of investigation, industries were able to find out the root cause of infections. With the implementation of blockchain technology, within no time, industries are able to find out the root cause and trace the point of adulteration from origin to delivery point. Even industries may be able to know the forthcoming possible problems and warn or act accordingly. IBM has created its food trust blockchain for this purpose. It is capable of tracking the products from origin to delivery point. It can verify the authenticity of the products and their labels like organic, local, fair trade, etc. As reported by Forbes, the Implementation of blockchain technology in the food industry is growing rapidly for tracking and user safety. This is only one example, other uses are also in the pipeline.
Use of blockchain in the voting of elections in a democratic country: How the immutable feature of the blockchain may be  used in voting to make it almost impossible to temper is described below: Each eligible voter will be issued a single cryptocurrency or token. Conesters will be allotted an address. The voters will send their tokens to an address of their choice. Each and every transaction is recorded which is immutable, transparent, and traceable. The counting of votes by humans and tampering with votes will be eliminated in this way. Voter confidence will be improved and voting turnout will be increased. Blockchain technology in the election voting of West Virginia was tested a few years back and found very useful results.
Healthcare system: There are various uses for the improvement of the healthcare system: Record of patients' personal details may be stored which will be immutable and maintain the privacy of the patients. Streamlining the process of billing and claims.   IBM Blockchain platform is working for the improvement of the healthcare system.
Property (real estate) records: The traditional system of land and property records consumes a lot of time, and money and is inefficient. Due to any human error, data may be corrupt. Again its update is much more difficult in a traditional system. Blockchain technology is capable of making it transparent, secure, and immutable. Moreover, it is a very fast process and efficient.  Owners can confidently rely on it.  It is visible to only the assigned person or authority.
Supply chain of Oil and gas industries: Multi-Cloud blockchain networks with Vertrax and Chateau software are launched by IBM to avoid disruption in the supply chain of bulk oil and gas distribution.
Home Depot is using the IBM blockchain network to accelerate the vendor's dispute resolution by collecting data regarding shipped and received goods.
Media and entertainment industry: Copyright data is managed by the blockchain network. Due to multiple transactions for the sale and transfer of copyright content, verification of such data is very critical for paying the compensation to the artists.  Implementation of blockchain networks helps a lot to manage the problems. Sony Music Entertainment Company in Japan is effectively using the blockchain network to reduce processing costs and improve productivity.
E-commerce platforms or retailers: The blockchain network is used to track the movement of goods from supplier to buyer at each point. The authenticity of sold items is also checked. Amazon.com is using the blockchain network for its global supply chain.
A revolution for the banking industry: Blockchain technology is useful for secured and efficient transactions in the banking industry. It will help to reduce the cost and streamline the different operations of the banking industry.
Killer applications: There are many use cases or applications of blockchain technology. However, some have very potential and proved as game changers for the related industries. Such promising use cases or potential applications are called killer applications. Examples:
Supply chain management	Identity management
Data management.
Internet of Things (IoT): IoT uses blockchain applications like Smart contracts to operate and manage devices, operations, records, and other activities. Some examples are listed below: On/off washing machine and other appliances. Navigation of vehicles, ships, etc. Traffic safety. Tracking, disposal, and recording the various activities in a very accurate way.
Tokenization: With the help of blockchain applications, Assets can be converted into digital tokens. Fractional ownership can be taken by tokenization. It is very much useful in renewable energy projects, carbon credits, green investment, etc.

Advantages and disadvantages of blockchain technology: Every technology gives some benefits and has some drawbacks also.  It depends upon its usage and implementation. Some of the Pros and Cons are listed below:

Pros:

Accuracy of the chain: Each and every transaction is validated by thousands of nodes and computer devices in the blockchain network. Even if one computer makes a mistake, it is not accepted by the rest of the network nodes and computer devices. Moreover, there is almost no involvement of human calculations.  Therefore the accuracy of each and every transaction is almost 100%.

Cost reduction: We have seen that for any payment made through a credit card,  a processing fee is charged by the bank or concerned credit card transaction authority. Similarly, if we pay through net banking, processing charges are levied. On the other hand, blockchain-based transactions eliminate third-party verification or central authority, therefore, transaction charges are lower side.

Secured transaction  and Tamper-proof storage of data: Blockchain technology works on three principles: Cryptography, Decentralization, and Consensus which make the system highly secure. Blockchain systems keep and update the transaction records in a decentralized manner, which means that each and every node or computer device of the network has the same record of transactions. Blockchain technology does not store its records at a centralized location. Tampering is possible at centralized stores, but in the case of a decentralized ledger, if the record is tempered with one node, it will not be accepted by the rest of the network. Therefore blockchain records are almost 100% tamper-proof. Similarly, after a transaction, its authenticity is validated by the blockchain network. After validation, this transaction in the form of a block is added to the blockchain blocks. Each block in the blockchain has its unique hash and hash of a block just before it. Therefore, the record is secured and immutable now.

High level of efficiency: Traditional methods, especially transactions across the border or at the international level, may take a reasonable time due to time zone differences, confirmation of transactions by both ends, different regulations of different countries, etc. However, transactions through blockchain technology may be carried out within no time because there is no international centralized authority to regulate it. There is no third-party involvement to verify the transactions which makes the process slow. Transparency, Smart contracts, and no single-point failure feature make it highly efficient. Blockchain transactions are chronologically immutable. It means all data is already in order. This makes the audit process much faster and more efficient. Due to almost no involvement of human processing and auditors, the blockchain system is highly efficient.

User privacy: Many blockchain networks are working on public databases, which means that anyone can access the transaction history of networks. It is half true because no one can access the sender and receiver information; it means we can not know who is involved in the transaction. In this way, user privacy is maintained.

Almost unlimited record capability in a decentralized form.

Transparency: Many blockchains are working on open-source internet or technology. It means anyone can see its code. Since the blockchain network is not controlled by a central authority. Anyone can suggest the changes and if the majority of the users agree to adopt the changes, the system may be upgraded accordingly. So public transparency is adopted here. However some blockchain networks are designed in such a way to be accessed and viewed by only a group of authorized persons, these networks are called private or permissioned blockchains.

Trust: For international transactions, there was a lot of trust deficit due to different rules and regulations across the border. To fill this gap, traditionally lawyers were hired to resolve any dispute, but it was time and money-consuming. Sometimes even these third-party meditaries also fail due to fraud, scams, and other reasons. Introduction of blockchain applications like cryptocurrencies, smart contracts, etc., hiring of lawyers, and chances of fraud, and scams are very remote due to almost 100% trust in the secured transactions through blockchain application.

Use as a Banking system for persons not having bank accounts or transaction facilities: Anyone can use the blockchain networks regardless of ethnicity, country, gender, location, etc.  It was learned in the past that 1.4 billion people mostly from developing countries do not have any bank accounts or means of storing their money.  So such people can store their money in a crypto wallet and have no fear of stealing by thieves. Moreover, it may be considered a Banking alternative with confidentiality, especially for people residing in countries that are underdeveloped or unstable due to political, war, or other similar situations.

Cons: Every system gives some benefits along with some drawbacks. Some of the drawback or disadvantages of the blockchain system is given below:

Cost of the technology, energy consumption, and, carbon emission: Though the transaction cost is lower on the blockchain network, the involvement of technology requires a huge investment. As we know, the mining process to generate new coins or blocks consumes a lot of computational power.  For example, millions of computer devices involved in the Bitcoin cryptocurrency network consume huge energy which is more than the annual consumption of energy by some countries like Pakistan. Traditional blockchain networks like Bitcoin and Ethereum use a consensus mechanism called PoW which requires computational power and electricity at a large scale to solve complicated mathematical puzzles. It produces Carbon emissions also.   These are the major concerns for the environment also. However, the use of alternative energy like solar power, wind energy, and excess natural gas from fracking sites has been started for the mining process. Bitcoin mining farms have been set up to use alternative energy.

Low transaction speed and inefficient data capacity of a block: Low speed to generate blocks and inefficient data capacity are other issues with blockchain technology. Bitcoin is a good example of this purpose. Its PoW (Proof of Work) mechanism takes around 10 minutes to generate and add a block to the blockchain. In this way, only 6-7 transactions per second (TPS) can be carried out.  Contrary to the blockchain technology, the Visa brand can process 65000 TPS.  The solution to this issue is in progress. Ethereum's speed to generate blocks is higher than Bitcoin's. ETH is developing and using a series of updates including data sampling and Binary Large Objects (BLOBs). Moreover, many blockchain applications are claiming tens of thousands of TPS. The second issue is related to the very limited data capacity of a block. Work is going on to increase the data capacity for the scalability of the blockchains.

Illegal activities: Blockchain networks protect us from hacking and preserve our privacy. However, this privacy feature is misused for illegal trading/activities on blockchain networks and illicit activities under the dark web on the Tor network. In the past (2011 - 2013), under the dark web, Silk Road was operated for the black market to buy and sell products because the identity of users remains anonymous in this system. However, the percentage of illegal activities in cryptocurrency transactions is very low. In 2023, it was estimated only 0.34%.

Lack of uniform rules and regulations: Rules and regulations vary from one country or region or another. There are no standard policies to control or regulate it.

Data storage limitation: It is a problem that we may face in the future. In the blockchain network, each node stores all records of transactions. Due to the growth in blockchain applications, we need huge data storage capacity. To meet the demand, new techniques and upgradation of digital storage systems are required, which is possible by huge investment and large physical space.

Low volume of transactions.

Blockchain-based networks are also facing various irregularities, challenges, and fraudulent activities like the collapse of high-profile service exchanges (FTX).

Due to such drawbacks, in the current year estimate,  44% of Americans do not like cryptocurrency transactions.

Is the blockchain system secured? It may be considered secured with some exceptions as described below:

It is a decentralized system and every node has a record of all transactions, etc.

A new block is always added linearly and chronologically at the end of the blockchain. After adding the new block, the previous block can not be altered.

Each block has the hash of the previous block. Any change in a block will change the following block. The blockchain network generally rejects such changes because hashes would not match.

However, some new and small networks can allow the changes. And they are prone to security and cyber attacks. However, hackers or attackers need at least 50% of the computational power of the network to penetrate into the system.

Security is based on distributed ledgers. Code is created for the security and the quality of the code decides the security level. If the coding system is not strong and it is vulnerable, security can be compromised.

On larger blockchains like Bitcoin, it is almost impossible due to the very high speed of hashing. In September 2024, the Bitcoin network was hashing @ 640 Exa hashes per second (here Exa means 18 zeros after 640 or we can say that 640 multiplied by 10 to the power 18). If any fraudster tries to change a block, by the time it will move past due to its very high speed.

Similarly, hacking of  Ethereum blockchain is almost impossible. Because the hacker is required to control more than half of the blockchain-staked ether. In September 2024, more than 33.8 million Ethereum was stacked by more than one million validators. In this way, roughly 17 million Well-planned ETH are required to be controlled by the hacker to penetrate into the system.

Well-planned security management like cyber security frameworks, assurance services, and best methods are used to reduce the risk of attackers, hackers, and fraudsters.

All blockchains are not 100% secured.

Final words: In this blog, we have gone through the Blockchain systems, their history, uses future, security, pros, and cons.  Its use cases, benefits, and applications are enormous. In addition to cryptocurrency and finance, each and every sector can benefit from the technology. As far as security is concerned, it provides a guarantee of safe, immutable, open transactions in various sectors. If we think about the disadvantages of cyber fraud due to the application of blockchain technology, It is everywhere. Every system technology or application gives benefits along with some drawbacks. Now if we think about the future of blockchain technology and its applications, it appears bright. Day by day its disadvantages will be sidelined and the world will witness its rapid growth in the future.

Disclaimer: With the help of self-knowledge, following, and similar websites, the best efforts are made to provide you with updated and authentic information through this blog. However, the author does not take any responsibility (legal or otherwise) for its correctness and completeness. In case of any doubt, please contact us or cross-check from reliable sources. This blog is not AI-generated and typed manually, therefore any typographical error is regretted. https://www.investopedia.com https://www.ibm.com https://aws.amazon.com https://builtin.com/blockchain https://www.simplilearn.com https://www.google.com https://www.techtarget.com https://www.coinbase.com

Hope for the golden future of blockchain technology and its applications. ==The end==