Blockchain, which was first introduced as a science experiment in 1991, is now almost three decades old. This technology has seen a lot of press in the last two decades, with companies all around the world theorizing about what this system will do and where it will go in the future.
Almost the entire planet is now connected to the internet and people are getting closer to the web day by day. Daily, millions of people use the web to do things like study, shop, post and pay bills. An individual’s digital presence becomes more apparent the more they connect digitally. While this application appears to be complex, and it can be, its main premise is actually quite easy. This technology is basically a form of digital ledger. To comprehend this technology better, let us take a deep dive into the intricate details of this technology.
What is Blockchain Technology?
It is a decentralized database of transactions that is replicated and distributed through all the network computing systems on a network. Each block in the chain comprises a lot of transactions, and if a new transaction takes place on the network, a log of that transaction is submitted to the ledger of each user. The decentralized repository maintained by different users is called Distributed Ledger Technology (DLT).
The Trouble with Digital Money Transaction
Before continuing with most online purchases, an individual must have valid identification proof. If you’ve ever bought something on Alibaba, using PayPal, or a familiar payment method, you would have come across the fact that these businesses ask you personal questions. Here, the issue isn’t with answering questions; it’s where the business is storing them.
When anyone uses the internet to go through these verification checks, they put their details on the internet. Then their digital identity duplicates itself through networks, posing a potential security threat to your sensitive data. For instance, Equifax was compromised when its personal information was stolen. This incident, along with a lot of others, demonstrates how fragile and insecure the online system is.
How it Ensures Security?
Security is ensured by blockchain. Individuals and companies may use it to build a peer-to-peer channel. They can use it to share data or money. It also enables people to build tough to steal digital identities. It is a method of storing data in such a manner that it is hard or even impossible to alter, hack, or trick.
This implies that if a single block in a chain is modified, it will become readily obvious that the chain has been interfered with. Cybercriminals would have to alter every block in the chain, through all shared instances of the chain, if they wanted to manipulate the chain structure.
What Makes Blockchain so Special?
Master nodes are a suitable technological approach for online identity verification. Master nodes choose a node to validate the consumer unanimously. They can also verify records in the same way. It is because the nodes of this chain technology are its lifeblood. There are three different kinds of nodes which are stated below:
- Node: It is used to receive and submit transactions.
- Full node: Does all the simple node tasks and it also holds a copy of the complete chain.
- Master node: Does all that the full node can do and also allows decentralized governance and budgeting.
Moreover, this technology is a form of distributed ledger technology in which transactions are registered using a hash, which is an immutable cryptographic signature. Some of the advantages of this technology include:
How Blockchain Protects Your Digital Identity?
This technology essentially establishes a cryptographic signature or watermark that can be attached to any of the digital transactions. As a result, any irregular or fraudulent transaction will be rejected because they will not bear the digital signature. This chain-based technology not only protects your primary identity information but also the copies of your data across the internet. This implies that if anything is on its chain, its presence automatically becomes safer. Thus, you have greater control of your personal identity. Moreover, companies often have greater say on who they accept or exclude from their network.
Understanding this chain structure technology allows for a better understanding of the complexities and risks that it may pose. Before employing a solution based on this technology, it’s critical to consider your priorities. The addition of KYC procedure to this chain structure has many benefits which can aid in the battle against document fraud, identity theft, and money laundering. It must be noted that criminals can also negatively leverage this technology. However, blockchain, a buzzword on the lips of any entrepreneur in the world, promises to make enterprise processes more reliable, powerful, stable, and cost-effective.