Blockchain technology has become extremely popular in a short span of time because of the unprecedented acceptance received by bitcoin, a digital currency based on the technology. Blockchain is basically a data structure with related protocols. The technology became famous because of its capability to offer and support disruptive innovations. It is an ever growing chain of records, called blocks. These blocks are linked using cryptography. This can be considered as a different form of encryption where in sensible data in converted into senseless data which can be reconverted only with decoding application.
Blockchain can be defined as a distributed ledger shared within a network of users, and records the transactions among the users. The special advantage of the technology is that the ledger is tamper resilient, a quality that is derived from cryptographic hash functions. A hash function converts random size messages to fixed size tags or hash values.
The system does not employ an independent arbitrator. Each transaction among the users in the group has to be validated or verified by all members of the network. Thus each transactions needs approval by all members of the network and the same is reflected in the ledger maintained by individual users. Distributed ledger model and approval by all users make the tampering of transactions records impossible.
Blockchain has over a period evolved as the best software platform for digital assets or currencies. Many have predicted that the technology will cause disruption and innovation to happen in financial system. Bitcoin is the main application based on this technology. Smart contracts based on this technology are gaining fast acceptance in financial sector. It may be surprising to note that the Big Four accounting firms have already adopted blockchain technology in different formats. Acceptance of this technology by Ernst and Young, PwC, Deloitte, and KPMG gives certification to the capabilities and integrity of the system. They are using private blockchain where in the access will be restricted to only authorized persons of respective companies only.
The concept of blockchain was conceptualized by Satoshi Nakamoto in 2008. This technology became the backbone of the digital currency bitcoin introduced by him. The distributed public ledger concept, decentralized consensus and high integrity make the technology suitable for keeping banking and financial transactions, recording of events and medical records. What is bitcoin? How much is the outstanding value?