Basics of Blockchain Technology
Blockchain technology does not rely upon third party to verify transactions but rather private key cryptography is used for fulfilling the authentication requirements. All the entries in the blockchain database are confirmed by digital signatures which ensure that the transactions are generated by a valid user.
Similar to signatures in real life, digital signatures are private keys which only the user can generate and this ensures the integrity of the transactions on blockchain. All the participants in the blockchain follow the same protocol and the distributed networking system prevents any single authority to control the system.
Blockchain Technology, an Example
Imagine the use of blockchain technology in digital voting where the main barrier is security. With the e-voting system, the fear is that the voters’ identity can become public which would demoralize the democratic process. The blockchain technology with its feature of digital signatures (private key) keeps the identity of the voter unknown to other participants in the network. The voter in this way can cast the vote on the blockchain network which is then verified through a digital signature, while the identity of the voter remains anonymous.
What blockchain technology offers to the business world is trust. The blockchain technology is designed in such a way that it cannot be altered by any participant or third party as everything is recorded on the blocks which are verified by all the participants in the network. The digital signatures confirm that the transaction is generated by the user and not an imposter.
The blockchain technology thus acquires the trust of the business participants as the fear of fraudulent transactions and information being altered in digital medium is completely eliminated by the blockchain. The technology has the potential of transforming the business world, and in the future more and more industries will adopt the technology for safe, secure and efficient transactions.