Exploring the Uncharted World of Blockchain

Photo by Launchpresso on Unsplash

In 2020, a critical judgment passed by the Supreme Court of India was of ruling out that the 2018 curb on cryptocurrency and the use of bitcoin imposed by the Reserve Bank of India was illegal. The verdict gave a new life to the investors in cryptocurrencies and exchanges that allow trading in them.

Bitcoin is a technological tour de force.

-Bill Gates

Cryptography was born from the need for secure communications during the second world war. With the technological evolution, cryptography made possible more secure communication, information storage, and transacting money online. Cryptocurrencies are a decentralized form of digital money focused on security and anonymity.

The first cryptocurrency was Bitcoin, developed by an anonymous person or group of people known as Satoshi Nakamoto after the 2008 economic crisis. It was evident from this crash that trusting intermediaries would not benefit in a volatile economic scenario and a need for a trust-less peer-to-peer monetary system arose.

Cryptocurrencies run on a distributed public ledger that is proof of all transactions that are updated and held by currency holders. This technology is called the blockchain. Cryptocurrency is barely the first use case, and many more uses will arise. The future of the financial world will have tokenized forms of shares and bonds traded using this technology.

The name blockchain was not in the initial bitcoin documentation though bitcoin was the first to use this technology as an immutable database for its working. The name was coined over time and is quite intuitive because whatever transactions happen are made to fill a block. If the block is correct, then it is added to a chain of earlier blocks. Every block gets hashed using a complex cryptographical approach, due to which the hash will change if a block is tampered with or the previous block is touched. In this way, if anyone tries to tweak any block, all the blocks added after it will go invalid, which makes it unhackable.

There is no central authority to check the working in a blockchain. Ledgers are updated communally by all the nodes called miners. Different consensus mechanisms are used in blockchains for their miners to check if the block added is correct. For Bitcoin, the consensus mechanism followed is proof of work, in that all nodes solve a complex mathematical problem using brute force. The one who solves it first decides for the block and gets new bitcoins as a reward. Any node that behaves maliciously gets expelled.

Vitalik Buterin, a Russian-Canadian programmer, was amazed by bitcoin and the technology behind it. He wanted to write codes that would self execute on completion of terms of agreement of that transaction, these are smart contracts, but bitcoin has its limitations. Hence, he developed a new blockchain and named it ethereum. Ethereum is gaining popularity and can incorporate smart-contracts that are coded on the blockchain directly using the solidity programming language. The execution of these codes cost something called ether gas while it runs on its cryptocurrency called ether.

Companies and corporations that were initially skeptical about blockchain now have started embracing it and are finding new ways to use it for their benefit. Facebook has launched its cryptocurrency called libra. Spotify has acquired blockchain startup Mediachain and is aiming to tokenize the content on its platform digitally. The Linux Foundation has introduced Hyperledger for enterprise-grade blockchain solutions. Even governments around the world want to harness the power of blockchain. In India, Niti Ayog has published a Draft Discussion Paper named Blockchain: The India Strategy. The government is quite optimistic about the promises blockchain makes.

Private blockchains exist in companies where the roles of nodes, miners, administrators, and others are predefined. On the other hand, bitcoin-like blockchains are open to the public, and anyone can occupy any role of their choice.

Many Scenarios are there in which blockchain can contribute quite efficiently. A Digital Identity management system is where all the data of a person gets stored on a blockchain. The data which is requested only will show up after a key is verified. That makes sure that the information is safe, and no one is using it for their monetary gains. Supply chain management can use a blockchain to track down any complications. Truly shared economies will come into existence, where service providers will directly get connected to consumers without any intermediaries. Asset tokenization will reduce piracy and give power to intellectual rights. Society will have peer to peer trust system that will prove ownership of any property. All blockchain use cases have one common theme they promise to exclude massive intermediaries, bring prosperity, and equal voice to everyone. That is something which the internet was to achieve but failed poorly.

As eduAlgo primarily focuses on Pythonistas. It is of great worth to discuss opportunities for python programmers in this field. Python is easy to learn, simple to implement and has community support because of its popularity. Python has lots of free packages to facilitate blockchain development. Python frameworks like Django and flask are of use for the backend development of blockchain applications. Python libraries like web3.py enable the developer to use ethereum for Smart contracts and python for the interface. As a concluding statement, it is enough to say blockchain will be in high demand in the future so, one should at least get informed of it.

Photo by NASA on Unsplash

Originally this article was published in “The Developers Quest” the monthly digital tech magazine from the eduAlgo organization. Visit the official site here: http://www.edualgoacademy.com/

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Amogh Pete

Amogh Pete

Hey, I am a creative person with enthusiasm for marketing-related stuff. I am a computer science and engineering undergraduate with a curiosity for blockchain.