Steemit Crypto Academy Contest / S8W1 - The Importance Of Blockchain Technology

Hi, This is Asad Fazal from Pakistan. I hope everyone here is fine and enjoying life to full. Today I'm here to take part in the Season 8 Week 1 contest held by SteemitCryptoAcademy Team. The topic decided by the team is The Importance Of Blockchain Technology. The topic is very interesting because I love to share my knowledge about blockchain and technology. It will also be useful topic because we will learn from other Steemians. So without further ado, lets start!

Blockchain Technology is a rapid growing technology that stores transaction records on several nodes or databases in a network. These nodes confirm and verify the transaction and get a fees reward in return to cope up with expenses. The storage in the blockchain is generally known as "Digital Ledger".

Each of the transaction occurs on the network is verified by digital signature of the node or computer or owner. This makes the information highly secure. You can take digital ledger as a Google spreadsheet with thousands of records. This sheet is distributed among various nodes or computers that store transactional records in it. This means, anyone in public can see the data but has no rights to change or alter it.

Blockchain technology is rapidly increasing in today's era due to it's major benefits that gives a user almost full control over his assets. The most affected field is financial business and the positive outcomes are coming from time to time. But it is also needed to keep in mind that with every new technology, new issues also arise. Let's discuss those issues one by one:

As we all know blockchain is decentralized due to which no one is controlling it. It means there is no third party who can protect you against cyber attacks, malicious attacks, and hacking. If a hacker is able to access your side, he can change the records easily and no one can get your data or money back. This is the first main issue in current blockchain technology.

The blockchain technology uses different nodes to confirm transaction and to keep the accurate records. Since nodes or computers have limited capacity to store data, it becomes difficult to scale up the system. So handling large amount of data is difficult in blockchain technology.

The main issue of trust is blockchain not being regulated. This is why most people have not much trust in cryptocurrency and blockchain technology. To cope up with this, it must be regulated with proper authorities so that people will gain interest in it and can shift their businesses to blockchain.

As there are nodes working to confirm the transaction so that next block can be processed, it consumes high energy. There are multiple nodes or computers working and each have to store large data so will need high speed computer to work on blockchain. High speed nodes or computer require much more energy than normal computers that result in high energy consumption.

These are some issues in the advanced blockchain technology. Moreover, it is also discussed that whether the current blockchain technology is capable to support the complex and multiple in millions of transaction records. If not then it is not possible to implement it worldwide because of highly complex financial transactions currently going on.

We need to know whether the blockchain technology is capable to make it strong enough for solving above issues. If we look, blockchain technology has great potential in it and if more advance technology is integrated with it, it can solve all financial transaction issues including complex transactions.

Not only there are issues that come with blockchain technology but it has numerous benefits and features that are important to mention. It is the most advance and modern way of storing transactional records and assets data on a decentralized distributed ledger system. The blockchain technology is known as the secure, transparent, and easy to use with no third party interferrence required.

Here are some of it's key features that we all must know to gain trust in blockchain technology:

The first feature of blockchain technology is decentralization. It means there is no third party involved between two parties and the user is responsible for all transactions and actions. The decentralize nature makes it secure and away from scammers and hackers.

The blockchain technology uses cryptographic algorithms that help in securing the network and data stored on the blockchain. By name one can understand that there are blocks and they are chained, it means the data is encrypted and stored on multiple nodes or blocks or computers that makes it impossible to change or alter as the data needs to be changed on all nodes.

Third is the data stored on the blockchain can't be removed or edited. This makes the transaction secure and not any party can change the data later. This is the best feature of blockchain technology but it was has some drawbacks.

Fourth is transparency which means the transactions are public so anyone can see them but there is no option to change them. It helps to track the transaction and verify everything easily. It also let user know that transaction is valid or not.

This feature is not yet fulled implemented because there are still some issues in scaling up to complex financial transactions. But still blockchain can up to some point can be scale up and scale down to support multiple applications criteria.

So these are the keys features of blockchain technology that makes it more valuable than traditional technologies and financial systems. Blockchain technology is transparent, secure, decentralized, scalable, and flexible but not irreversible.

Blockchain technology has set the world's technology to skyrocket due to it's advance features and benefits that were not in the traditional technologies. However, it is a little complicated for some but for people with knowledge of it knows how it works. To understand the working of blockchain technology have a look at below image and steps.

From blockchain word, you can easily understand there are series of blocks that are chained in a network. Each block has cryptographic hash of previous block, the transaction data, and timestamp. The cryptographic hash works for integrity of chains and if any data is altered, it will display the change.

When a new transaction is added in the blockchain, it is broadcast to all nodes and each node can verify the transaction by using consensus algorithm. If more than 50% nodes valid the transaction it will be added to the block and if not then will be rejected.

Each block in the network has a unique code that includes the transaction data and previous block data. In this way, block after block creates a chain that is unbreakable that makes it impossible to alter or remove the data from the blockchain.

It means if a hacker wants to change the data of a block, he need to alter all subsequent blocks and it requires a lot of computing energy. This is why blockchain technology is strong and irreversible. The working method of the blockchain can be easily understand with the above image.

The Zero-knowledge Proof (ZKP) is a method in blockchain in which two parties or users can authenticate each other without showing the sensitive data. This method is gaining popularity because it keeps the privacy safe and can be used in multiple applications.

Let's take an example here to understand it. A verifier sends a hash H to the prover and he asked the prover to provide proof it has secret data that can hash to H. Then the prover will provide zero-knowledge proof that will satisfy or ensure the verifier that data is present that hashes to H and will not show the data itself to the verifier.

The best use of ZKP is to authenticate users online for any application, registration, or services. With the help of ZKP, a business or company can ensure that only verified users are part of their system. It is best option for banking apps and financial transactions where secure is the main concern.

In ZKP usage, a user needs to solve a cryptographic puzzle to gain access to the service or application. If a user is unable to solve, he can't access and if he solves, he will be granted access. Moreover, digital identities can be verified with ZKP. The process is to create digital signature with the help of private and public keys' combination. After that they are encrypted and only specific user is allow to use it because it proves his identity.

The blockchain technology has increasingly in demand worldwide and sooner or later each country has to adopt it because of it numerous advantages and less disadvantages than traditional technologies. Below I have mentioned advantages and disadvantages of blockchain technology.

1. Decentralization is the main advantage that means there is no third party involved and the data is protected from third person. No one can alter the data and only two parties are responsible for the transaction.


2. Transparency is another benefit that means the transaction is public and anyone can see it and verify if the transaction is correct or not. But there is no option to alter the data that means it is immutable.


3. Cost effective because the transaction on the blockchain requires less power and less time with minimum fees. The miners and validators are rewarded in cryptocurrency so the fees is minimum that makes it cost-efficient.


4. Highly Secure blockchain technology because of decentralization. The transactions are secure because only network participant can verify it but no ne can alter or remove the transaction. Also the data stored on the blockchain is encrypted to keep the hackers away.

1. Irreversible is benefit of it as well as disadvantage because if a user sends the transaction to the wrong address, the process can't be reversed and his funds will be lost. There is no middle party to control so you are responsible for each transaction.


2. Lack of Regulation is another disadvantage of blockchain technology. There is no control of governement and other third parties over the network so you can't get the data and funds back if hacked or scammed.


3. Scalability is another disadvantage as current blockchain technology is not reliable for complex financial transactions because it requires large network to process transactions. While executing complex transactions in quantity, the network can crash.


4. Cyberattacks are easy to conduct because user is responsible for every transaction. His computer, laptop or browser can easily be hacked and the keys can be stolen by the hacker. There are different ways to secure your keys that is another topic.


5. Adoption of blockchain technology is currently limited to only banks and financial institutes because there are trust and reliability issues in public and other businesses. But from time to time this disadvantage will be vanished.

Blockchain technology has huge potential and is currently being adopted by many financial institutes. The future of blockchain technology is very bright because the traditional technologies are not very reliable and there are multiple issues in that that are not present in blockchain.

The blockchain technology offers reliable, secure, transparent, and low-cost transactions to happen. It is also currently handling complex transactions but for multiple in thousands of complex transactions, the blockchain technology needs to be advanced more. Moreover, there are some limitations and drawbacks that are needed to be removed to gain the trust in the market.

This is all from me for the "Steemit Crypto Academy Contest / S8W1 - The Importance Of Blockchain Technology". I invite @samminator, @malikusman1, @steemdoctor1, @simonnwigwe, @preye2, @lavanyalakshman, and @theentertainer to participate in this contest and share their blockchain technology knowledge with us.