Blockchain technology, also known as distributed ledger technology (DLT), may be one of the most hyped innovations of the 21st century. Although initially developed to facilitate transactions for Bitcoin, it now powers thousands of other cryptocurrencies. That’s not all, however. It’s also the ideal tool to handle all sorts of digital transactions in many scenarios, such as supply chain and logistics monitoring, property records, secure medical data sharing, cross-border payments, voting, and smart contracts.
If you’re ready to advance your career in this rapidly evolving field, a blockchain degree may be just what you’re looking for. A master’s in blockchain will train you to implement the latest innovations in an exciting career. Keep reading to discover what blockchain is, how it works, and why it’s so important.
WHAT IS BLOCKCHAIN?
A blockchain is a digital database or ledger of transactions maintained by a network of powerful computers. Records are maintained in a secure and decentralized environment, making it very challenging for someone to alter, cheat, or hack. Blockchain technology is a safe and secure method non-trusted partners can use to collaborate and agree on the validity of transactions without the oversight of a third-party intermediary like a bank or the government.
The blocks which are connected using cryptography keep information secure. According to CSOonline.com, “Cryptography is the art of keeping information secure by transforming it into a form that unintended recipients cannot understand. In cryptography, an original human-readable message, referred to as plaintext, is changed using an algorithm, or series of mathematical operations, into something that to an uninformed observer would look like gibberish.” Cryptography literally means “secret writing.” The encryption of plaintext into ciphertext involves both an algorithm and a key. Even if someone were to know the algorithm used in the encryption, it would be difficult, even impossible, for them to decrypt the information without the key.
Blockchains store data electronically in digital format. Information is gathered into groups called blocks, which contain an ever-growing list of digital records. As information is added to a block, each transaction is independently corroborated by peer-to-peer computer networks and is time-stamped. It is then appended to data already stored in the block. Once this takes place, the data cannot be revised.
Blocks have limited storage capabilities. When full, they’re closed and linked to the previously filled block, thereby creating a data chain known as a blockchain. Any new data is added to a new block. When a block is full, it will be added to the chain and given an exact timestamp. Blocks are chained together chronologically.
Although cryptocurrencies popularized the use of blockchain, this technology shows great potential in many other applications requiring the authorization and the recording of a series of transactions or actions, including medical records, property sales, and legal contracts.
Investopedia provides a more straightforward definition of blockchain, stating it’s “a shared database or ledger. Pieces of data are stored in data structures known as blocks, and each node of the network has an exact replica of the entire database. Security is ensured since if somebody tries to edit or delete an entry in or copy of the ledger, the majority will not reflect this change, and it will be rejected.” Blockchain technology maintains a protected and decentralized record of transactions, ensuring the security and fidelity of the information, thereby generating trust without a trusted third party’s oversight.
HOW DOES BLOCKCHAIN WORK?
Blockchain works through a multistep process:
- A sanctioned participant enters a transaction which is then authenticated by blockchain technology
- The transaction is added to an existing block, or a new block is created representing the data or transaction
- A replica of the entire database is added to all computer nodes within the network
- Authorized nodes authenticate the transaction, adding the block to the blockchain
- The update is distributed throughout the network, finalizing the transaction
The objective of blockchain is to permit the recording and distribution of digital information that cannot be deleted, altered, or destroyed.
WHAT’S THE BIG FUSS ABOUT?
Using voice calling as an example, before the internet, a call between the US and Europe required a multibillion-dollar company like AT&T to lay cable between the two continents and use it to complete a call. Calls were costly due to the expense of this infrastructure. After the creation of the internet, a company such as Skype allowed users to make voice calls and even video calls at no cost.
In the same way, credit card companies, banks, and other organizations must each independently deploy infrastructure to secure their ledgers. These organizations can now utilize blockchain technology at minimal cost instead of using other, more expensive options. With blockchain, their transactions are safely stored forever without having to be concerned with its security.
ARE THERE DIFFERENT TYPES OF BLOCKCHAIN?
There are four different blockchain variants. Let’s look a little closer at each of them.
Anyone may use a public blockchain network. Ledgers are visible to anyone on the internet. Transactions to the blockchain can be verified or added by anyone. Public blockchain networks are free to use and offer incentives to join.
Private blockchains reside inside a single organization. Access to the network to verify and add data is restricted to specific individuals within the organization; however, anyone on the internet is typically allowed to view the data.
Consortium blockchain networks are used across organizations, and only organizational groups may verify and add transactions. In consortium blockchain networks, the ledger may be open to anyone within the organizational groups or limited to specific individuals. Pre-authorized nodes regulate consortium blockchain networks.
As its name implies, a hybrid blockchain network combines public and private blockchains. Both permission-based and permission-less systems may be used. A specific organization may control some parts while others are visible as a public blockchain.
WHAT IS BLOCKCHAIN MINING?
Miners serve a significant purpose in blockchain networks. Miners are independent, interconnected nodes that authenticate transactions and add blockchains to the public ledger. Mining’s chief function is to reach a consensus based on legitimate transactions. This prevents users from spending coins already allocated for another transaction.
Mining uses vast amounts of resources and computing power to open new blocks, approve users’ transactions, and solve mathematical problems. Mining serves to assure the decentralization of the blockchain network and save the blockchain from hacker attacks and block fraud.
WHAT IS PROOF OF WORK?
Proof of work is a type of cryptographic proof where an individual demonstrates that a specified amount of computational effort has been expended. Proof of work (PoW), also referred to as proof of stake (PoS), is the original consensus algorithm in a blockchain network. It confirms the transaction and creates a new block after miners compete to finish the network transaction. Proof of work safeguards against users' double-spending coins or tampering with any data blocks.
WHAT ARE HASH ENCRYPTIONS?
Hash encryptions or hashing refers to a cryptography process where input data of any type, length, size, or scale is output as a fixed-length string. Hash codes are generated by a mathematical function that converts digital information into a string of letters and numbers. The output is independent of the input transaction’s length. If a hash’s information is modified in any way, then the hash code is also changed.
WHY IS BLOCKCHAIN SO IMPORTANT?
Blockchain provides a public, decentralized, trustworthy, and secure way to manage assets. Blockchain technology is important because:
- All transactions are public, and anyone can verify them in seconds
- It is both convenient and safe
- Wealth can be safely moved
- Transfers can be completed in minutes and verified/secured in hours
- It allows the creation of decentralized applications
- It reduces operational costs
- It provides enhanced transparency and reliability
TAKE YOUR CAREER TO THE NEXT LEVEL WITH A MASTER’S IN BLOCKCHAIN
Do you want to learn more about blockchain technology? University of the Cumberland’s online Master in Global Business with Blockchain Technology degree will prepare you for an exciting career in blockchain technology. Request more information to speak to an admissions counselor.