Blockchain technology is a new technology that was created recently and has succeeded in stealing the attention of the world community, including in Indonesia. As is known, the blockchain world is gaining popularity at the moment.
This happened after the public’s high curiosity about the world’s crypto assets which then made the search for blockchain also increase.
This technology has also begun to be heard often among ordinary people, which at first happened because of the development of internet technology today.
However, what is a blockchain? Is it different from cryptocurrencies? Check out the full review below to answer that question.
What is Blockchain Technology: History and how it works
Basically, blockchain is a technology that is used as a storage system or digital data bank that is connected to cryptography.
Although its use can hardly be separated from Bitcoin or cryptocurrencies in general, now many other sectors have also taken advantage of this technological development.
As the name implies, blockchain does utilize computer resources to create connected blocks, aka chains. Later, these blocks are used to execute a transaction.
Blockchain was originally used as a system that ran the first crypto currency, namely Bitcoin. It was developed in 2009 by a Japanese person named Satoshi Nakamoto—this name is supposedly anonymous.
Referring to Manav Gupta’s book, Blockchain for Dummies, blockchain was originally formed and developed in order to meet a great need for a system that works more effectively, efficiently, cost-effectively, is more secure, and proven safer to perform tasks in the form of recapitulating a number of transactions. future financial events.
The idea for using this technology was born in 1991 when two people named Stuart Haber and W. Scott Stornetta published a journal entitled Journal of Cryptography: How to Time Stamp a Digital Document.
As mentioned above, the use or utilization of blockchain can not only be done in the cryptocurrency sector, although the main sector that uses this new technology is in the financial sector.
In this sector, blockchain can be analogized as a digital ledger that can be accessed by anyone, anytime, and anywhere with ease—without having to obtain the approval of financial parties/institutions such as banks.
Furthermore, this technology will basically make all transactions in it more transparent and secure. This can also reduce the occurrence of data misappropriation, such as bribery/corruption.
Apart from the financial secto), blockchain functions can also be felt in a number of other sectors, such as media, medical, telecommunications, property, to agriculture.
This is in line with the blockchain opportunity table in various fields made by McKinsey in 2018.
Blockchain Working System
In simple terms, this is how the blockchain works with an example of a Bitcoin purchase case:
- Suppose someone buys Bitcoin and a transaction occurs
- This transaction process will be transferred through a computer network installed using the peer to peer (P2P) method which of course will be spread throughout the world
- The computer network then solves an equation that serves to confirm the validity of the transaction
- After the transaction is confirmed to be a valid transaction, the next process, namely the transaction, will be grouped together as a block
- This collection of blocks will then be put together, then recapitulated, to become a record that contains a long history of the transaction. That long history will be permanent and cannot be changed
- Transaction has now been completed
Differences Blockchain Technology with Cryptocurrency
Although these two terms are often heard together, blockchain and cryptocurrency are actually two different things. As is known, the trend of cryptocurrencies is also currently increasing among the public, especially since Bitcoin reached a record high price last year.
In general, cryptocurrency is a digital currency system that is secured with cryptography so that it cannot be counterfeited by criminals. On the other hand, blockchain is a technology that is used as a digital data storage system that is connected via cryptography.
Therefore, despite being different, the two complement each other because blockchain is a technology for cryptocurrencies.
Blockchain Advantages and Disadvantages
1. Blockchain Advantage
- The transaction system is transparent because it can store transaction data safely and transparently
- Have good data protection, namely with a verification system by miners or miners before being executed on many computers
- The transaction process is more efficient and faster
- Security is guaranteed because this technology is equipped with the advantages of encryption with cryptography
- Have a better audit system because here everyone can see directly and track transaction data which allows them to be able to find out the audit trail of an asset
- Eliminate broker fees. Through the presence of blockchain, the role of brokers is no longer relevant because the transaction fees for it will be replaced by a consensus algorithm
2. Blockchain Weaknesses
- Takes a long time. This happens because confirmation of data on this network requires agreement from the parties who enter the network.
- Therefore, sometimes the processes on the blockchain network will take longer when they want to join the network
It’s hard to set up. The reason is that the decentralized system has made a number of parties in this network scattered from various parts of the world, which makes reforms cannot occur evenly and comprehensively. The change will occur depending on the party, whether you want to make an update or vice versa
Blockchain Can Change the World in the Future
The next question is whether this technology can change the world in the future and how?
Blockchain, as a new technology, is predicted to be able to change the world with its presence and development. This technology does have an attraction in the eyes of its users, for example:
- Improve P2P interactions
- Gives full control over assets
- Encouraging scientific progress
- Offers stability
- Increase crowdfunding
The increasingly massive use of blockchain is considered to be one of the reasons that this technology will be able to change the world in the future. It is estimated that blockchain technology will change many industrial sectors in the next ten years. Among these industries, ranging from banking, supply chain management, to agriculture. This happens because of the main aspect of blockchain, namely efficiency.