With time, storage technology has evolved. From traditional storage spaces like Cloud, we are in the era of technologies like Blockchain, Database, and Data Warehouse. These technologies have made it easier to manage a huge chunk of data for IT operations.
Among all these technologies, Blockchain has grown into markets beyond expectations since its inception. Blockchain in businesses is now involved in multiple operations. From automating processes to securing fintech applications, the technology has gained quite a good amount of attention as well. Paired up with other technologies such as Machine Learning (ML), Artificial Intelligence (AI), Smart Contracts, and more, Blockchain technology has proved its efficiency is only limited by our progress in finding its uses.
A Statista report states, by 2024, forecast spending on Blockchain solutions globally might reach a threshold of $19 billion from the forecasted spending of $6.6 billion in 2021.
In this blog, furthermore, we are shortlisting a few crucial characteristics of Blockchain technology along with a few crucial consensuses that innovate modern business processes. So, if you find the topic interesting, stick with us until the end of this blog.
What is Blockchain?
In simple terms, Blockchain is a decentralized ledger created for better performance, cybersecurity, and privacy. The ledger is dependent on several nodes which record transactions without centralized control. Blockchain stores the data in blocks. After each block that is filled with the data, a new block is added automatically in chronological order. Blockchain technology offers benefits like tamper-proof data storage practices, decentralized storage spaces, and more.
Characteristics of Blockchain
As a report published by ResearchGate defines it so well, Blockchain is designed to offer better reliability, security, and control. The major characteristics of Blockchain are proof. Let’s look at these characteristics.
- Private Blockchain- As the name suggests, private Blockchain servers are created and owned by individual organizations. With a network of trusted nodes, owners have more control over these types of servers.
- Public Blockchain- Cryptos such as Bitcoin are supported by these types of Blockchain servers. On a public Blockchain, individuals can register and make entries in the distributed ledger by following terms and conditions defined by server developers. Users signup on crypto Blockchains to execute transactions, mine crypto, and more.
- Permissioned Blockchain- These Blockchain servers are usually created for many parties. A few organizations will have access to one Permissioned Blockchain server to execute corporate tasks.
- Decentralization- Private Blockchain servers work on eliminating the interference of third parties in a trusted environment. Private Blockchains are limited to organizations and offer a limited decentralized environment for processes to happen. However, in Permissioned Blockchains, multiple parties can onboard the server. The condition is, none of these parties will have full control over the Blockchain server.
- Transparency- Blockchain servers record tamper-proof transactions with details such as timestamps, the entity of the user, and more. These records can neither be modified nor deleted. Thus, it is always possible to track the user and the timestamp of any suspicious transactions to stop or predict possible cyber attacks.
Consensus of Blockchain
Consensus algorithms are the pillar of Blockchain servers. These consensus algorithms help in making Blockchain servers more reliable and secure to process transactions without manual approval. If you are familiar with Blockchain already, you must have heard about a few consensus algorithms already. Let’s have a look at them.
- Proof of Work (PoW)- Used by many cryptocurrencies like Bitcoin today, PoW was initially published as an idea by Cynthia Dwork and Moni Naor. PoW connects nodes in a trusted environment by adding them to a connected server. PoW helps in channelizing and creating new blocks on a crypto block server. The process is generally known as mining and rewards with currencies for the mining processes. PoW requires a huge amount of computing power and resources. Thus, it is dependent on a huge hardware configuration.
- Proof of Stake (PoS)- An alternative to PoW, this consensus mechanism considers a number of coins by a validator for stakes to validate block transactions. PoS is designed to reduce the requirement of computational power. In parallel, it also reduces the advantages cyber attackers can have to make the server more secure. To get qualified as a miner, coin owners are required to fulfill the minimum staking requirements. Even after that, PoS selects miners randomly. The ultimate purpose of designing is to reduce resource consumption. Compared to PoW, it is more eco-friendly and scalable.
- Proof of Capacity- In simple words, if you have free hard drive space, and you want to get selected as a miner, you can invest the free hard drive space into the mining process. The more space you have, the more chances you get of being selected as a miner. Once you mine a block, you get block rewards.
- Proof of Elapsed Time- In this Blockchain consensus, validators or nodes get a waiting time. Thus, every validator has a fair chance due to the waiting time that they get from the server. Nodes with the least waiting time get selected first as miners.
- Proof of History (PoH)- This consensus focuses on verifying the passage of time between events. It evaluates sequential steps in a verification process through a set of computation processes. Currently, Solana is using PoH by hashing its transactions and events with the SHA256 hash function. This allows Solana to come with outcomes that are unpredictable. With a timestamp on each transaction, it is easier to verify that in what sequence transactions took place. Thus, human intervention is not required for such use cases.
Apart from the Consensuses of Blockchain that we discussed above, there are more consensuses getting innovated. For instance, Proof of Activity (PoA) is a hybrid that uses patterns from PoS and PoW. On the other hand, Proof of Burn (PoB) requires coin owners to send some coins to a wallet from where they won’t be able to access them again. However, PoB increases their chance of getting selected as miners.
In the end, hopefully, this blog was informative and resourceful for you. You can explore more tech blogs on the website to find out more about what’s going on in technology markets.
- Why is Blockchain a safer storage space compared to traditional cloud storage servers?
Well, Blockchain offers a tamper-proof ledger. To modify a process, a user will have to make a new entry with new algorithms. With each entry made on the server, there are details such as timestamps, the entity of the user, and more are added as well. So, in case if cyberattacks are attempted, it is easy to track the source of the attack down.
- Is Point of Stake the future?
PoS is the future and will gain more popularity with time. Why? Because PoS is an eco-friendly option that also reduces the reliance on hardware. So, PoS has the potential to make crypto mining more affordable and accessible.
- What can be the cost of building a blockchain application?
That depends on many factors like features, region, and more. For instance, North American developers will cost you more compared to Indian developers. So, it depends on where you hire developers for your project. The cost of building a blockchain application can range between $10,000 to $200,000. So, it all depends upon your plan.
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