The blockchain market size is expected to grow from $4.93Bn in 2021 to $227.99Bn by 2028. It is estimated to grow at a CAGR of 72.9% from 2021 to 2028.
Now what is this blockchain technology? In general terms, Blockchain is a subset of a distributed ledger technology (DLT) which contains cryptography, smart contracts, and distributed ledger design. Let’s deep dive into this.
What is blockchain?
Blockchain is system that stores data in immutable form. In other sentence blockchain is chain of blocks that holds data into block and once block added in to chain no one can manipulate block or its data.
The plus point of blockchain system is it is built on distributed network and there are very powerful conscious algorithms to verify blockchain data. As of now blockchain majorly being used to store transactional data, consider it as credit and debit entries of cryptocurrencies. Whenever there is transaction first it gets verified by the network and after that it will be added into block. Now there are two thing we need to understand, first is how blockchain works and it’s in genral architecture? And another is how distributed network works.
How blockchain works?
For example, A wants to transfer 50 crypto to B. Consider it as a transaction. Once A request this transaction in blockchain network, network will verify transaction request and validate that A has sufficient balance to transfer 50 crypto to B. Once validation has been done, network adds transaction entry into block and that block after some time added into main chain.
The process of transaction validation and adding it into chain is known as mining process which is done by blockchain’s network node. In mining process miners tries to validate transaction by conscious algorithm and achieve common chain state accepted by all other miners. This node is physical system in distributed network which runs an algorithm to validate transaction.
How blockchain stores data?
Let’s understand how blockchain stores data. In blockchain each block contains hash of previous block added into chain. Hash is basically 36 characters long string that is created using all the transactions inside that block and block’s other properties like timestamp and Markle root hash of transaction. So, in case of manipulation in transaction will change the hash of the block too. And conscious algorithm will reject this block to be added into chain. Markle root is hash of all transaction inside block.
Application of Blockchain Technology
Now to understand why we need this technology or why this technology is in boom right now is because the blockchain is based on distribute network architecture. So, there is no central server or governance that manage the data. Centralized system data is managed by any company or organization, possibility of manipulation of data is high.
In blockchain data will be verified and managed by the network itself so there is transparency in system, you can view all the data available on blockchain network and verify that data.
Blockchain is used in peer-to-peer transaction where two parties do not want to involve any third party as mediator and wants to transfer crypto currency directly, Voting and election process, financial management as immutable public ledger etc are the popular use cases of blockchain technology.