Blockchain: Definition, How it Works to Application Examples
This blockchain technology offers advantages in terms of efficiency in recording transactions and tracking data
Blockchain can also be defined as a technology that focuses on the best use of computing technology with the aim of creating a collection of groups or, as the name suggests, blockchain, a series of blocks that are connected to each other.
From this it can be concluded that a group of interconnected blocks has a different record of a series of transactions and can be used to track the whereabouts of assets contained in the corporate network.
Blockchain itself is seen as transactions in digital form, which of course have arrangements and are based on the shape of the structure. With this clear structure, each individual record or named block is connected like a chain called a chain.
For a more detailed explanation, DailySocial.id describes it as follows!
Blockchain is a collection of various records that are processed or processed by a group of computers that do not contain an entity or a whole. Collections of blocks or data records are secured and linked using cryptographic principles.
The networks they contain have no centralized authorization or authority. Then why? This is because the blockchain contains various records formatted like a very large ledger. Accounts can be shared, but their contents don't change. In addition, all information in the ledger is visible and accessible to anyone who only looks at it.
Therefore, the three principles of blockchain technology include the principle of transparency, because blockchain is transparent. This property means that everything contained in the blockchain is visible to other people, who are collectively responsible for the operation of their every action.
In addition to all of the above, blockchain technology is free from transaction fees, including infrastructure fees. With these advantages, blockchain is said or considered as the simplest, smartest and most efficient way to transfer information from one person to another and so on in a safer and of course automatic way.
The various blocks listed in it have received verification status from different computers and of course the transmission process is directly assisted by online support.
Different blocks, successfully controlled by the computer, are then added to the chain and then divided in a special network. So, after that, a special record is automatically created that contains a unique history that was previously created as a result of this process.
An example can be described in a situation where you buy a train ticket through an application or a certain place to buy a train ticket. For payment transactions, you use the credit card payment method. That is, the credit card service provider then takes steps to reduce it so that the transaction process runs smoothly and successfully.
The use of blockchain can also cause a drawback, namely the operator of the train is not given access to save costs when processing or processing credit cards.
All event tickets are fully transferred to the blockchain. In this process, the parties in the ticketing process are only prospective passengers from the train company that serves them
When you buy a train ticket, the ticket is valid as one block. The ticket or block then goes through further processing to be added to the ticket blockchain. This can be likened to the process of monetary transactions occurring on the blockchain, which are interpreted as unique, verifiable, and unverifiable records.
The blockchain contained in the ticket is a kind of public record of all transactions that occur for the purchase of a particular train ticket or perhaps for the entire rail network. The records contain various transaction histories for each ticket sold from all previously recorded travel records.
How the Blockchain Works
The main function of the formation of the blockchain is to function as a form that gives permission for digital information to be recorded and distributed or disseminated without having access so that it can be changed, destroyed, destroyed, and deleted.
This has earned blockchain the nickname Distributed Ledger Technology (DLT). The working system of the blockchain is to use bitcoin purchases. In the following, we will present the working system of the blockchain.
- The way blockchain works starts with someone buying a number of bitcoins.
- After that there will be a transaction process, the transaction process will be transferred through a computer network that is installed using the peer to peer method which of course is spread throughout the world.
- After that, the computer network then completes an equation that serves to confirm the validity of the transaction.
- After the transaction is confirmed to be a valid transaction, the next process is that the transaction will be grouped together as a block.
- This collection of blocks will then be combined into one and will be recapitulated to become a record that contains a long history of these transactions that are permanent and cannot be changed.
- After that, the transaction is complete.
Because the blockchain makes transactions more secure, decentralized, safe, and durable or permanent which can attract interest from many industries in the world.
Advantages of Blockchain
Guaranteed Data Security Quality
The database in the blockchain is append only, which can only be added and cannot or does not provide access to repair the data. thus it will make it difficult for hackers who want to hack the data in the blockchain.
Using More Transparent Systems
As previously explained, this blockchain technology offers advantages in terms of efficiency in recording transactions and tracking data. It also shows the safety and transparency of the data stored.
This is evidenced by the fact that during the transaction process, all parties can see public access without having to go through the login process first.
Unlike bank-owned systems, blockchain-owned systems are different in that they use all the technologies that have been successfully implemented in the blockchain, all data, information, and even funds that users provide do not fall into the hands of other people without the user's knowledge.
Much Better Audit Quality
Blockchain has the advantage of giving users access to the history and traces of all audit funds belonging to that user. This is very useful for reducing the risk of misappropriation of funds that currently occurs in the business environment.
Can Prevent Possible Middleman Fees
Not only is the presence of the blockchain directly helping to eliminate middlemen in the blink of an eye. An agent or what is often referred to as an intermediary often adds a transaction fee as a form of remuneration for his services to replace the role.
So this is the advantage of the blockchain, where all activities resulting from historical records and traces become more organized, structured and controlled. It also becomes more durable and long lasting.
Examples of Blockchain Implementation
Application of Blockchain in the Entertainment Industry
One of the emerging technologies from the blockchain system is the non-fungible token (NFT), which allows musicians to avoid piracy and other copyright issues. Because, every holding NFTs can be tracked directly through mechanisms Smart contract.
In addition, the blockchain system in NFT allows artists and fans to collaborate without violating the artist's copyright. Therefore, it is not surprising that several world musicians such as Snoop Dogg and several major K-pop labels publish works in the form of this technology.
Application of Blockchain in the Financial Industry
It can be said that the financial industry is the industry that has benefited the most from this blockchain technology. According to the Mckinsey study above, the application of blockchain technology in the financial sector can increase wealth and minimize administrative costs in this sector.
Because blockchain technology allows banks to send and receive financial data to and from abroad quickly and transparently without third parties. In this way, additional resources can be saved, eg costs and space to store documents and time to write them.
For example, the application of blockchain technology to the letter of credit (L/C) system in Singapore can reduce document processing time from 14 days to only 2 days.
Application of Blockchain in the Health Industry
The reliable, fast and transparent dissemination of information via the blockchain system also benefits the healthcare industry. This area requires the patient to sign certain documents and take them with them to change hospitals or make insurance.
The presence of these offline documents will certainly increase storage costs because these documents are important. Blockchain allows patients to move between hospitals without paperwork.
Hospitals transfer patient data to other hospitals without worrying that other hospitals will process the data. Therefore, the blockchain system allows patients to change hospitals, easily buy insurance, while in hospitals, this system allows savings and transparency of information.
Application of Blockchain in the Public Sector
Surely you already know how difficult and long it takes to issue documents such as KTP, KK or other documents in Indonesia. Requests for the publication of this document required photocopies and a large collection of documents that stood in line at the office for weeks.
Not to mention, the documents you collect can end up in the hands of irresponsible people due to mismanagement or selling in unclear forums such as piracy forums. Blockchain technology is a solution worth considering to overcome this problem.
This technology allows people to directly upload their personal data and then register it with government systems without fear of having the data misused, because to change this data, manipulators need sophisticated technical skills and tools.
In addition, the application of blockchain in the public sector with double verification and cross verification also minimizes the existence of intentional errors such as corruption, fraud, fraud or accidental errors such as typing wrong numbers etc.
Application of Blockchain in the Supply Chain
Blockchain technology is also expected to have a major impact on the logistics or supply chain industry. The global logistics industry is currently growing with the increasing number of e-commerce users.
Logistics companies today not only ship large quantities of raw materials to other companies at the same time, but also ship goods to end users, who collectively do not number that much.
In fact, to serve consumers, logistics companies also need to collaborate with other parties, from banks, truckers to other overseas logistics companies. Not all of these processes are effective when there is dishonesty, errors in the writing of documents or an imbalance in the use of technology.
Blockchain technology, which offers decentralized, transparent and secure data storage, is a solution that is currently the talk of many logistics companies. The reason is, this technology allows logistics company owners to enter data and store it automatically and safely, while partners facilitate access without fear of data manipulation.
Application of Blockchain in Science
Thanks to its decentralized and secure data creation and storage system, blockchain can also be used for research data collection, especially in the fields of biology, chemistry and health.
In this case, research participants can write down their own genomic information and make related digests. Researchers wishing to use genomic data must obtain consent from the participants involved and pay royalties on the genome if the research proves successful.
The Impact of Blockchain Implementation on the Environment
The environmental impact of the adoption of blockchain and its derivatives is still a matter of debate. On the one hand, this technology has the potential to reduce consumption of sawdust such as paper, save storage space so that no additional buildings are needed and possibly reduce environmental damage, but on the other hand, blockchain products such as NFTs and cryptocurrencies do well. requires electricity and produces emissions.
Even though it is touted as the most secure data storage and distribution technology, the use of blockchain in the seven industries above requires adequate technical understanding and infrastructure, so the possibility of implementing this technology will not occur at all in the near future.