Hello BlockChain – Glad You Arrived in IT World

This article represents a very high level concept around what is BlockChain Technology. From the time I have latched on to this technology, trust me, I am glad I am investing my time into it. Whether it will live up to hype or not is something I do not care about. What I care is the cool manner it accomplishes transactions in decentralized manner thereby removing the need for third-party centralized system. Its truly amazing and fascinating technology. Please feel free to comment/suggest if I missed to mention one or more important points. Also, sorry for the typos.

Following are the key points described later in this article:

• What is BlockChain?
• What problem can be solved using BlockChain technology?
• What are key components of BlockChain technology?

What is BlockChain?

BlockChain is a technology phenomenon which got started as a result of BitCoin system. You could access information about current bitcoin transactions on BlockChain.info website. BlockChain technology is at the heart of BitCoin Systems. Simply speaking, it is about a chain of blocks which is maintained in decentralized manner by one or more system (miners) in a distributed peer-to-peer network. Each block in this chain consists of a set of transactions. These transactions are related to an entity exchanging a unit of value with another entity. Following diagram could help you understand better:

What problem can be solved using BlockChain technology?

If any problem that has following as key components, BlockChain technology can be explored to solve the problem:

• Trade or Transaction involved
• Ownership
• Trust

Lets take a look at some of the very simplistic examples such as following, from non-financial, non-banking world:

• Healthcare: As per this page, “The ability to have insurance companies, hospital billing departments, lenders, and patients using one blockchain to manage payments could reduce redundancies across the entire industry”, says Winkelspecht.. He further goes on to say that Patient records can be created, shared, and appended by multiple parties, introducing efficiency and transparency to a heavily siloed industry.
• ERP: As per this page, “A blockchain system could be used to integrate supply chain of groups of businesses in an open, decentralized, traceable way.”

What are Key Components of BlockChain technology?

Following are four key aspects of BlockChain technology:

• Distributed Ledger: A distributed ledger
• Distributed Peer-to-peer network: A distributed peer-to-peer network consisting of nodes representing virtual currency (BitCoin) owners and miners. Note that miners are the nodes which mantains the entire copy of the public ledger, users’ wallets etc.
• Proof-of-work mining network: Miners (nodes) which finds solution to complex mathematical problem while processing the transactions
• Consensus algorithm: Distributed computation system which validates the blocks based on consensus, thereby, allowing blocks to be added to the blockchain.