What is Blockchain Technology | IAS TARGET IAS Target

What is Blockchain Technology?

18 Nov 2021

Category : Science and Technology

Topic: What is Blockchain Technology?

Blockchains are new secure, encryption-based data structures that are distributed over the network. This technology supports the transmission of cryptocurrencies such as Bitcoin and data and digital assets. The blockchain, led by Bitcoin, provides consensus between distributed nodes and enables the transfer of digital goods without the need for centralized transaction authentication.

How does it work?

Blockchain technology enables instant and smooth peer-to-peer transactions for anonymous and secure transactions. This is achieved by distributing the trust of vital intermediaries across an extensive global network through mass collaboration, clever code, and encryption to prevent tampering with all transactions that have ever occurred on the network.
A block may be defined as the "current" part of the blockchain, which records some or all of the latest transactions and, upon completion, enters the blockchain as a persistent database. A new block is generated each time the block completes. The blocks are linked in the correct linear time series (like a chain), and each block contains a hash of the previous block.

Benefits of Blockchain Technology

  • Bitcoin is just one of blockchain technology's applications that have been tested throughout the industry.
  • Healthcare, banking, education, agriculture, power distribution, and land registration are potentially profitable sectors.
  • A blockchain-based smart contract that records all information can make your business easier.
  • This improves the reliability, accuracy and efficiency of contracts while significantly reducing the risk of fraud.
For example, blockchain technology can play an essential role in managing health insurance claims by reducing the risk of insurance fraud. This technology can also prevent counterfeit medicines from being sold domestically by tracking every step in the supply chain network. AI and the IoT can significantly benefit from blockchain applications. In the IoT world, thousands of devices need to communicate with each other quickly and seamlessly in real-time.
The introduction of blockchain by Indian banks could help stop fraud like Punjab National Bank, as technology updates information for all users simultaneously. It may be used to strengthen further our national institutions, including the Judiciary and Election Commissions. All important citizen information such as land registries, census records, birth and death records, business permits, crime records, intellectual property registries, electoral rolls, etc., are all used as a public ledger to prevent unauthorized opening using blockchain.

Challenge:

Blockchain technology is expensive to deploy first—large energy consumption for blockchain function. Blockchain is usually an open ledger that anyone can see, thus protecting the privacy of individuals and businesses. However, knowledge of the benefits of distributed ledger technology is still limited.

Conclusion:

When automated risk management, smart contracts, and similar tools are used in a network, a cascade of fast and difficult commitments and liquidity flows can spread throughout the network. This interdependence can require creative organizational thinking to meet the needs of governance and robust risk management. Before deploying blockchain in public sector computing systems, you need a robust and informative data repository—appropriate regulations on the use of blockchain technology in the country.
Identify and resolve critical issues and challenges in implementing this technology, including data protection. India needs to effectively divert its technological and human capital surplus to establish itself at the forefront of this imminent wave of innovation.