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Top 15 Frequently Asked Questions On Blockchain Technology
Explore a complete guide to What is Blockchain? What is Smart Contract in Blockchain? What is Blockchain Consensus Algorithm? How does blockchain Work and more?
If there is any ingenious technology having its sunshine every day, then obviously it would be Blockchain. The technology, that is not at all a new technology, but still, it is conquering many industries towards its lateral.
The evolution of blockchain technology is being a revolution nowadays. Due to its bright fortune, many numbers of blockchain products are presented by industry experts and tech enthusiasts each day.
Initially, Blockchain technology had been the underpinning technology to ensure secure bitcoin transactions. As the year forge ahead, the blockchain technology is getting more advanced.
However, people may ask and clarify their questions about blockchain on forums or in comments, but still, they having an indecipherable inquiry. To Straighten all your doubt here we have defined some of the basic Blockchain FAQ.
1. What Is Blockchain?
Blockchain a public ledger or a distributed database of all bitcoin transactions. It is an open-source technology, information is immutable and anyone can access the details at any time. As Blockchain is a distributed ledger, there will be no control or central authority of records stored.
Anyone in the network can add the data and cannot be deleted or altered further. Usually, the blockchain stores the data in terms of blocks, and those blocks are linked together like a chain and will be encrypted for security. To validate the transaction here Blockchain uses Proof of Work Mechanism.
Read More about What is Blockchain!!
2. How Blockchain Can Be Used In Businesses?
By eliminating the middleman, Blockchain permits the secure sharing of business processes like business activities, records and contracts between firms and partners in an encrypted manner. Blockchain Uses cryptography principle to store the data which are impossible to hack, duplicate and misuse.
The Transactions will be done on multiple computers in a chain, hence the records are very difficult to alter.
3. What Kind of Data Can Blockchain Store?
Blockchain is a Distributed database that maintains the details of each transaction in a series of blocks and those transactions will be added to the ledger in chronological order. The Stored transaction details in a block called genesis block.
Normally a block consists of
previous hash(I.e hash of the previous block ),
data(I.e sender address,receiver address,transaction amount);
hash(I.e like a unique digital fingerprint)
nonce(I.e Random value)
4. What are the Types of Blockchain?
1. Public Blockchain - It is a decentralized Open Source platform where anyone who has the internet connection can become a part of the blockchain network and can access current and past records and verify transactions. The purpose of a public blockchain is for mining and cryptocurrency exchanging.
Example: Bitcoin, Ethereum
2. Private Blockchain - It is a centralized platform with some restrictions and permissions to join the network. These Blockchains are usually used within an enterprise and organization. The purpose of private Blockchain is voting, supply chain management, digital identity, asset ownership, etc.
Example: Hyperledger, Corda
3. Hybrid Blockchain - It is a combination of both public and private blockchain. This Hybrid Blockchain gives businesses the flexibility to choose what data they want to make public and what data to keep private
5. Is it Possible to Create a Separate Blockchain For a Business?
Of course, it is possible. Even Though the public blockchain is open source, we can’t use it to store private records of a business or organization. So, we can leverage the open-source characteristics of the blockchain to build a private blockchain, and after the customization, A business can utilize it to store confidential business data.
6. What is BaaS?
Baas - Blockchain as a Service. Nowadays technology is being available as a rental, similar to that Blockchain-as-a-service gives the enterprises the ability to rent blockchain infrastructure in the cloud.
In Detail, the software and hardware required to run blockchain applications are completely provisioned, managed and hosted by the service provider. The Baas partner can build the blockchain network on any blockchain platform such as Ethereum, Hyperledger Fabric, Corda, Bitcoin, Chain Core, BlockApps or Quorum.
7. How Much It Would Cost to Setup a Private Blockchain For a Business?
Somewhat a challenging question to answer. The Cost to Setup a Private Blockchain For a Business will vary based on the requirements, blockchain platforms, technologies, and tools we use. Use nearshore and Offshore Blockchain Development Services to cut short the cost.
There are a lot of the best companies in the world and one among them is Bitdeal, the best Blockchain Development Company providing the true and relevant blockchain information about blockchain development costs.
8. Is Blockchain Hackable or Not Hackable?
The codes in Blockchain will be embedded in Digital code and stored in a shared database that protects the data from deletion, tampering, and modification. Though Blockchain is a very influential technology, it is not entirely immune to attacks.
9. What is Blockchain Consensus Algorithms?
Consensus Algorithm, the core part of any blockchain network. This Consensus Algorithm is responsible for verifying the transaction, balance, and signature. There are different types of Algorithm, the most important implementations are Proof of Work (PoW) and Proof of Stack (Pos)
Proof of Work:
Producing a proof of work involves solving a mathematical puzzle, this puzzle is solved by the miners and the one who finds the solution will get the miner reward. The process of including the Blocks of blockchain needs high computing power and electricity
Proof of Stack:
The Proof of Stack replaces miners with validators, and ask validator to hold up certain coins as stake. In proof of stack, a validator can validate the transactions depends on the number of cryptocurrencies he/she holds. That is the more bitcoins you own the more bitcoin mining power you have.
Explore More About Blockchain Consensus Algorithm
10. Key features of Blockchain?
Decentralized - No central authority to monitor, instead, all your activities will be stored in a public distributed ledger
Enhanced Security - All the Information on the Blockchain is hashed cryptographically that is the network will hide the input data through the mathematical puzzles.
Distributed Ledger - Every information about the transaction and participants are distributed to every node in the blockchain network.
Consensus Algorithm- This Consensus Algorithm is responsible for verifying the transaction, balance, and signature.
11. How Does Blockchain Work?
Initially, the node starts a transaction by signing it with a private key via cryptography.
Once the transaction is validated it is included in blocks called the genesis block.
The new block will become a part of the ledger.
whenever the new block is added, the transaction will be reconfirmed
Six confirmations are required in a network to consider the transaction final.
12. What is Double Spending in Blockchain?
Double Spending is the process of spending money more than once, and it heads to inflation. To dismiss this approach, blockchain-based cryptocurrencies like bitcoin use a Consensus mechanism known as Proof-of-work. Here the Blockchain Technology prevents Double Spending by verifying the transaction from multiple users in the network.
13. Is there any restriction that only a particular industry should utilize Blockchain?
Blockchain, the Irrevocable technology having its flag of victory in various industries ranging from Solar Energy, Railway, Agriculture, Education, to Various Supply chains. Hence there is no restriction that only a particular industry should utilize Blockchain
14. Is it Possible to Create Token On Ethereum Blockchain?
Yes, it is possible to create a token on the ethereum blockchain, Since ethereum is an open-source blockchain, it has a lot of library packages and has its predefined standards like ERC20, ERC721, ERC222, ERC723 and more for developers to create tokens on ethereum.
15. How Blockchain differs from Traditional Database?
The Primary Difference between Blockchain And Traditional database is
Architecture - Blockchain uses Distributed Ledger Technology whereas Database utilizes client-server architecture.
Integrity - Blockchain Supports data integrity whereas, in the database, there is a possibility for malicious activity
Transparency - Blockchain offers High Transparency Whereas in Database admin has the control.
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