1.1 Characteristics and Features
Last updated
Last updated
Decentralization: Unlike centralized systems, where data resides in a single database, blockchain operates across a network of nodes. This eliminates the need for intermediaries and reduces the risk of single points of failure.
Immutability: Once data is recorded on the blockchain, it cannot be altered or deleted. This ensures a permanent and tamper-proof history of transactions.
Transparency: All participants have access to the same data, fostering trust within the network.
Security/Cryptography: Blockchain uses advanced cryptographic techniques to secure data. Additionally, its decentralized nature makes it resistant to attacks.
Anonymity: Everyone has their own generated address, not a user ID, phone number or email address, without KYC checks.
Smart Contracts (feature): Self-executing contracts with predefined rules written into code. Smart contracts automate processes and eliminate the need for intermediaries.
Public Blockchain: Open to anyone and decentralized, public blockchains (e.g., Bitcoin, Ethereum) allow anyone to participate in transaction validation and data access.
Private Blockchain: Restricted to specific participants, private blockchains are often used by enterprises for internal processes. Examples include Hyperledger Fabric.
Consortium Blockchain: Controlled by a group of organizations rather than a single entity. Ripple is a prominent example.
Finance: Blockchain enables peer-to-peer transactions, cross-border payments, and decentralized finance (DeFi) platforms that operate without intermediaries.
Supply Chain Management: Blockchain provides transparency by recording the journey of goods, from production to delivery.
Healthcare: Secures medical records and ensures patient data privacy.
Digital Identity: Creates decentralized identity solutions, giving individuals control over their data.
Government: Used for voting systems, land registry, and public record management.
Advantages:
Enhanced security and privacy.
Increased transparency and trust.
Cost savings by eliminating intermediaries.
Challenges:
Scalability: Managing high transaction volumes remains a challenge for many blockchains.
Energy Consumption: PoW systems require significant computational power.
Regulatory Uncertainty: Legal frameworks are still evolving.
Solidity: The primary language for developing smart contracts on Ethereum.
Rust: Known for high performance, Rust is used in blockchains like Solana.
Go: Popular for building blockchain frameworks such as Hyperledger Fabric.
Python: Versatile and beginner-friendly, often used for blockchain prototyping and scripting.
JavaScript: Enables interaction with blockchain networks through libraries like Web3.js.
Regulations around blockchain vary across jurisdictions:
Europe: The European Union introduced MiCA (Markets in Crypto-Assets) to regulate cryptocurrencies and blockchain-based financial products.
United States: Blockchain is treated under existing financial regulations, with the SEC and CFTC overseeing crypto markets.
Asia: Countries like China impose strict controls on blockchain use, while Singapore promotes innovation.
