Blockchain making waves with cryptocurrencies

Blockchain technology has seen a widespread adoption in recent years. It is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Apart from initial adoption into cryptocurrencies, today it is being used in healthcare, real estate, smart contacts, etc. However, improper implementation of the technology has also been the cause of many blockchain security issues, making the blockchain vulnerable and allowing attackers to perform several malicious activities.

Blockchain promises to solve the problem of bitcoin and other virtual currencies. The technology has the capability to transform the internet to an internet of value. But as things passed, blockchain started showing its true colours and projects both within the govt and private in a big way. It was accepted that this would be the future of the internet and as we can see now, the Web3 and the Metaverse world would be heavily dependent on it.

A blockchain documents each transaction details, identifying the sender, recipient, input amount, and output amount. Only the parties to a transaction can unlock the contents of the block because they only hold the private key that is necessary to open the data. But since each entry bears a hash, anyone can verify the existence of a transaction within the block.

The blockchain protocol is a special case of DLT, where the consensus protocol creates a daisy chain immutable ledger of all transactions that is shared across all participants. The cryptographic consensus protocol ensures immutability and irreversibility of all transactions posted on the ledger. The ledger itself can also be programmed to trigger transactions automatically. Hyperledger project has given it push when it needed to get into the use case stage.

Blockchain technology will transform business models from a human-based trust model to an algorithm-based trust model, which might expose firms to risks that they may have not encountered before. In order to respond to such risks, firms should consider establishing a robust risk management strategy, governance, and control frameworks. However, Cyber security breaches and violations are increasing in people's minds and in the news as new threats appear more and more often, compromising our personal data and causing economic damage.

S Mohini Ratna, Editor, VARINDIA