Blockchain would be one such technology now which has its sunshine every other day. All sectors, including conventional businesses, are now adopting blockchain related to their functional area for one or another purpose. Even though the technology is new, blockchain is conquering the world by spreading its functions to almost all industries.
As blockchain is considered the future technology, there are many blockchain-based products and services presented by many, including the industry giants. In its initial chain, blockchain was the backbone technology for ensuring secured transactions of cryptocurrencies, including bitcoin. However, as time passes, blockchain is getting more advanced, and its usage is also diversifying.
As it is a comparatively new technical specialty, people have plenty of doubts and questions about blockchain when planning to adopt it. In order to address those, here we will review some of the most frequently asked questions about blockchain fundaments and the expert answers for the same.
FAQ on blockchain
1. What is the function of blockchain?
Blockchain came up as an open-source technology, where anyone can access the information at any time. Blockchain primarily functions as a public ledger that consists of distributed databases of bitcoin transactions. As the data remains in distributed ledgers, there is no such central authority to control the stored records.
Anyone part of this network will be able to add data that cannot be altered or deleted further. The blockchain stores data in blocks, and these blocks are clubbed together in the form of a chain that is kept encrypted. In order to validate crypto transactions, blockchain adopts the mechanism called Proof of Work.
2. What is the relevance of blockchain in business?
Blockchain works straight by eliminating any middleman. This enables an environment for secured sharing of business records, activities, and contracts, etc. All these are kept encrypted and cannot be altered by a third person. Blockchain is based on the cryptography principle for storing data, which is merely impossible to hack, misuse, or duplicate. Blockchain transactions are done on multiple computers spread across the cluster, so the records are impossible to be altered by someone. A strong database backup as offered by RemoteDBA.com can also add value to the adoption of blockchain.
3. What types of data can blockchain store?
As we have seen in the previous answer, blockchain remains as a distributed DB, which maintains details of each transaction in many blocks and adds the same to the ledger in chronological order. Such a stored transaction in blocks is known as a genesis block. The structure of a block is as below.
- Previous hash, representing the hash of the preceding block.
- Actual data (like the address, amount, etc.)
- Hash, the unique fingerprint of that particular block.
- Nonce, which is a random value.
4. How many types of blockchains are there?
We can classify blockchain basically into three types;
- Private Blockchain – This model remains a centralized cluster with many permissions and restrictions in place for the users to join the network. The primary purpose of private blockchains is for confidential voting, digital identity, supply chain management, asset ownership, etc. These types of blockchains are used within organizations. Cord and Hyperledger are real-time examples of private blockchain.
- Public Blockchain – Unlike private, this model is more decentralized, working on an open-source blockchain platform in which anyone over the internet can be part of the network and access the records to verify any transactions. This is used for cryptocurrency transactions and mining etc. Bitcoin and Ethereum are examples of a public blockchain.
- Hybrid Blockchain – As the name suggests, this is the combination of both private and public blockchains. The hybrid model will give businesses more flexibility for choosing the data of their interest to be made public or kept private.
5. Shall we create a separate blockchain for our own business?
Yes, it is fully possible to create a standalone blockchain for business. Even when the public blockchain remains open-source, it cannot be used for private record storage for any organization. So, it is possible to leverage the open-source advantages of blockchain to build the private blockchain, and with customization, as needed, businesses can use it for their own use case.
6. How much may it cost to set up a private blockchain?
The cost may actually vary from case to case. The primary variables which decide the cost of a private blockchain include but are not limited to the requirement of the business, usage of the platform, technologies, blockchain tools needed, etc. You can use offshore or nearshore blockchain development services also to manage cost-effectively. Many good companies offer private blockchain developmental services, including Bitdeal, one of the top-rated service providers offering the most relevant blockchain information.
7. What is Blockchain as a Service?
Blockchain as a Service or Baas is the latest technology stack available on rental for those who plan to adopt blockchain technology for business. Blockchain offers a cloud-based infrastructure with scalability that the users can customize according to their needs. Both the hardware and software needed to run blockchain will be provisioned by the provider along with management and hosting of the same. BaaS partners will build the blockchain network for the customers and also offers support for platforms like Hyperledger Fabric, Ethereum, Bitcoin, Corda, BlockApps, Chain Core, or Quorum, etc.
8. What are the key characteristics of blockchain?
Foolproof security – Every piece of information on the blockchain is cryptographically hashed, which helps hide the input data, hard to be tracked.
Decentralized – No central store; instead, all you put in is stored in a distributed ledger, either public or private.
Consensus algorithm- An algorithm that verifies each and every transaction and signature to allow only secured transactions.
9. Can blockchain be hacked?
The blockchain contains embedded digital codes stored in a shared database that spreads across in blocks. This architecture will help protect the data from any possibility of deletion, modification, or tampering. Even though blockchain is a highly influential technology in terms of security, we need to know that it is not completely immune to attacks.
We will discuss more advanced questions about blockchain in our coming articles too. For any business which is planning to adopt business, this is the right time to start.
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