If you’re interested in mining Cryptocurrencies such as Bitcoin, you’ll get across a term like Blockchain Technology along the way. Blockchain is decentralized, which means it’s not controlled by any one organization. It’s like Google Docs that anyone can work on. In addition, nobody really owns it, anyone who has a link can contribute to it, and different people update it.
And as they do so, your copy also gets updated. While the idea that anyone can edit the blockchain might sound risky, it’s actually what makes Bitcoin trustworthy and secure. In order for a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders. Thereafter, the unique codes recognize users’ wallets and transactions.
While doing so, as a result, they must all conform to the right encryption pattern. These codes are long, random numbers, making them incredibly difficult to fraudulently produce. In fact, a fraudster guessing the key code to your Bitcoin wallet has roughly very less chance. Since they are the same odds as someone winning a Powerball lottery nine times in a row.
It’s this level of statistical randomness for blockchain verification codes that are needed for every transaction. Whilst, greatly reducing the risk anyone can make fraudulent Crypto transactions. With that in mind, before we move on, you can read and learn more about how Cryptocurrency works in detail. Plus the main Crypto types, as well as the mining/trading tools.
What Blockchain Technology Is All About
To enumerate, Blockchain Technology is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues. At times, Blockchain Technology seems so complicated.
However, its core concept is really quite simple since it’s just a type of Database. That said, to be able to understand the role of a Blockchain, we must first understand what a Database actually is. A database is a collection of information that is stored electronically on a computer system. Spreadsheets are designed for one person or a small group of people.
Resource Reference: Blockchain Overview | Some Key Facts To Distinguish With Bitcoin
Specifically, in order to store and access limited amounts of information. That said, you can learn more about the key types of databases that you should know. In contrast, a database is designed to house significantly larger amounts of information. Especially, information that can be accessed, filtered, and manipulated quickly and easily by any number of users at once.
Large databases achieve this by housing data on Web Servers that are made of powerful computers. These servers can sometimes be built using hundreds or thousands of computers — to have the greatest computational power and storage capacity. The blockchain security and trustworthiness responsibility is shared rather than taken over by a single, central entity.
And all this is necessary for many users to access the database simultaneously. While a spreadsheet or database may be accessible to any number of people, it is often owned by a business and managed by an appointed individual that has complete control over how it works and the data within it. Next, let’s learn how Blockchain works in Supply Management.
How The Blockchain Technology Work
Blockchain is most frequently associated with cryptocurrency and NFTs, but its numerous applications go far beyond that. Blockchain has already had a marked impact on several sectors of the economy thanks to its novel use in solving issues of transparency and cost in the data processing. Any kind of data can be stored in a blockchain, not just in financial records.
As per the money definition, Blocks in a blockchain contain more than transaction data, they also have what’s known as a hash. Cryptographic hash functions, or hashes, are the mathematical algorithms mentioned above. These fulfill a crucial role within blockchain systems and are the reason blockchain works in the first place.
Hashes appear as a variable series of numbers and letters on a block. Clearly, the number-letter combination such as 4760RFLG07LDD492K8381O82P78C29QWMN02C1051B6624E99 is generated from the data within a block and functions as its digital signature. Each block includes the hash of the previous block in its chain.
This is how blocks are linked together and how blockchain networks maintain their integrity. Modifying any content within a block would change the hash, which is a red flag for others in the network. Put it all together, and you get a self-regulated network without intermediaries, where third parties cannot monitor or interfere with transactions.
Proof of Work vs Proof of Stake
It’s, important to realize, that files in a blockchain are distributed across a network of computers called nodes. Therefore, in order to add information to a blockchain, a node must first integrate this data into a block along with the hash of the previous block. And then again, they must attempt to generate a new hash.
Once a hash for the new block is generated, nodes add the block to their version of the blockchain file and broadcast the update across the network. A majority of the computers on the network must verify this new block and update their copy of the blockchain file for the update to be considered valid.
If consensus is reached, the block permanently becomes part of the chain, and the computer or node that created it is rewarded. With that in mind, the process by which computers compete to create new blocks is called “mining.” Blockchain networks run this competition in one of two ways as we’re going to elaborate down below.
Consider the following key methods:
Under a proof of work system, nodes in a blockchain directly compete to see which one can solve a complex mathematical equation first. The first one to do so gets the “proof” of their “work” and is rewarded by earning the right to mine the next block of a transaction. The miner is then rewarded for processing the block.
Under a proof of stake system, nodes are selected via a computer algorithm that employs a certain randomness degree. Nodes that hold more of the network’s currency are more often chosen, which rewards prolonged participation — their “stake” — in the network over raw computing power. Those processing a block are known as validators instead of miners.
The Blockchain Technology Role In Supply Management Process
According to a certain oltnews blog, Blockchain Technology is the reason behind the success of various Cryptocurrencies such as Bitcoin and Ethereum. This new-age tech has made complex supply chain operations effortless alongside increasing their efficiency. Besides cryptos, this particular tech has also gained laurels in many other fields.
The Blockchain Technology Tools in supply chain management work as a ledger or a record book where transactions are present. And spread across networks. They are based on DLT or distributed ledger technology, a decentralized database managed by numerous participants. Eventually, there are some DLT properties that are increasingly beneficial.
Consider some of the following elements:
- Highly encrypted and secure transactions.
- A transparent and distributed ledger that all its managers can access
- A programmable interface where you can run applications of different kinds.
- Recorded and time-stamped transactions
- Immutable and secure storage of data, which makes them very difficult to alter.
- The privacy of the participants who manage and keep track of the data is maintained.
Realistically, the features of DLT blockchains mentioned above (among many others) make it a secure interface for trading Cryptocurrencies. And now, let us look at how Blockchains have positive implications on the supply chain management process beyond the world of Cryptocurrencies that we all know.
Consider some of the following benefits:
- Distributed databases: Data is stored on multiple servers which are scattered across several physical locations. Generally, this provides greater reliability, performance, and transparency than conventional databases.
- It offers better traceability options: Distributing, planning, and manufacturing products are all features of the supply chain. The usage of blockchain tech can, however, simplify this complex process.
- It runs on open-source software: The entire network community can see the nuts and bolts of the code behind it, working together to discover and fix bugs, glitches, or flaws.
- Data can only be added and not changed: Once a blockchain network verifies new information, it cannot be altered. New data must be verified by a majority of the network participants.
- Elimination of the manual process: Supply chains can also run their operations through a digital interface. However, some outdated supply chains are still using paper and pen.
Blockchains work on a digital interface, which can help solve this problem. They come with reliable and distributed recording features, which justifies replacing the outdated manual process. Plus this evolution offers other significant benefits:
- Quick and efficient transactional procedure: Blockchains can efficiently work without the involvement of any bank or payment service providers. As a result, the payment terms can be resolved quickly using this distributed ledger. Only the supply chain participants and managers are allowed to view the process of settlement. Henceforth, making blockchains are very transparent, secure, and highly accurate when making big and complex transactions.
- Highly reliable and integrated interface: The blockchain data is tamperproof, credit to the accurate time-stamping of data, which is difficult to destroy. Once data is uploaded here, it’s time-stamped and permanently recorded in the DLT.
Also, all managers can immediately view data when they are uploaded to the ledger and immediately time-stamped. This creates better transparency of data and legitimizes the records.
And, as you can see, the easy, efficient, and accurate tracking and recording facilities of Blockchain make it easier for their managers to track and manage their products from the beginning to the end. Meaning, that although it’s a verified process to manage supply chains, the manual procedure can be tedious and hectic to keep track of large and complex transactions.
How Blockchain Distributed Ledger Technology (DLT) Works
As I mentioned, Blockchain is a system technology of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. Essentially, it’s a digital ledger of transactions.
And as such, it’s duplicated and distributed across the entire network of computer systems on the Blockchain. Each block in the chain contains a number of transactions. And every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
As illustrated above, the decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT). In other words, Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash which you can learn more about in the Decentralized Database full guide.
A change of one block would be immediately apparent for temperament. Meaning, that if hackers wanted to corrupt a blockchain system, they would have to change every chain block. More so, across all of the distributed versions of the chain.
Technically, Blockchains such as Bitcoin and Ethereum are constantly and continually growing. But, why such a case? Simply, because there is a constant addition of blockchains. While significantly adding to the security of the ledger.
How Blockchain Helps Mine Bitcoins
For those interested or still new in Crypto Mining, before you start to Mine Bitcoins, it’s important to first understand something first. And that’s the Cryptocurrency mining process. Forthwith, as an example, we’ll consider Bitcoin mining. We define Bitcoin mining as the process of adding new transactions to a Crypto Blockchain.
Crypto Mining is a tough job though. With that in mind, people who choose to Mine Bitcoins use a process called Proof of Work as we mentioned. To enumerate, Proof of Work (PoW), means deploying computers in a race to solve mathematical puzzles that verify transactions. And as a result, the Bitcoin code rewards miners with new Bitcoins.
Learn More: What’s The Difference Between Blockchain And Bitcoin?
This is so benefactor as it helps entice miners to keep racing. As they try to solve the puzzles and support the overall system. Each time, the Bitcoin mining code will release no new coins. Instead, miners may have to rely on transaction fees. Blockchain is the technology that underpins Cryptocurrency Bitcoin.
But, there’re several other Cryptocurrencies with their own blockchain and distributed ledger architectures. Meanwhile, the decentralization of the technology has also led to several schisms or forks within the Bitcoin network. Creating offshoots of the ledger where some miners use a Blockchain with one set of rules. While others it with another set of rules.
The Topmost Useful Tools To Mine Cryptocurrencies
In the early days, it was so easy and possible for the average person to mine Bitcoins. But, that’s no longer the case anymore. Technically, because of its constant coding. Making solving its puzzles more and more challenging over time. That’s why it requires more and more computing power and resources.
Thus, today, if you want to mine Bitcoins, you’ll require an autonomous and powerful computer. In addition to access to massive amounts of cheap electricity to be successful. On the contrary, the mining process pays less than it used to. Making it even harder to recoup the rising computational and electrical costs.
Back in 2009 — when this technology first came out — every time you got a Bitcoin stamp, you’d get a much larger amount of coins than you do today. Meaning, that they’re more and more transactions now. So, the payout per stamp is less day by day. So, why is there so much hype around Blockchain Technology today?
Learn More: Cryptocurrency | Types of Cryptos, Mining & Trading Tools
Well, at the moment, Blockchain is the Holy Grail for many Cryptos like Bitcoin and Ethereum. Thus, it matters more than you think — even the likes of Jack Ma, Bill Gates, Elon Musk, and even Vitalik Simplilearn attest that (in his video).
Bearing in mind, there have been many attempts to create digital money in the past. But, unfortunately, they’ve always failed. The prevailing issue is trust. Furthermore, let’s say someone creates a new currency called the X dollar. How can we trust that they won’t give themselves a million X dollars, or steal your X dollars for themselves?
Luckily, Bitcoin solves this problem using a specific blockchain database type. Most normal databases, such as an SQL databases, have someone in charge. Whereby, they can change the entries (e.g. giving themselves a million X dollars).
Blockchain is different because nobody is in charge; since its users run it. What’s more, it’s not practically not possible to fake, hack, or double-spend it. So, people that own this money can trust that it has some value.
In a real sense, Blockchain has potential applications far beyond any given Cryptocurrency like Bitcoin. From a business perspective, it’s helpful to think of its technology as a type of next-generation business process improvement software.
On one side, the Collaborative Power of Blockchain Technology promises the ability to improve the business processes that occur between companies. Whilst, radically lowering the “cost of trust.” For this reason, it may offer significantly higher returns for each investment dollar spent. Of course, than most traditional internal investments.
On the other side, Financial Institutions are also exploring how they could also use this tech to upend everything digitally. From online order clearing and revenue settlement to business insurance. In other news, Blockstack PBC is now Hiro Systems PBC. The change to Hiro will mark a renewed focus on developer tools for the user-owned internet on Bitcoin.
While more clearly delineating the company and ecosystem. Hiro builds developer tools for Stacks, the network that enables apps and smart contracts on Bitcoin. For newbies, we already discussed how Blockstack Browser works in detail.
Related Resource References:
- Bitcoin Mining Energy Consumption
- What Are The Risks Of Public Blockchains?
- Blockstack Browser | The #1 Stacking Tool to Mine Bitcoins
- CryptoTab Browser | Earn Free Bitcoins While Web Surfing!
Blockstack Browser is yet another great alternative to CryptoTab Browser if you’re still interested in Bitcoin Mining that is. Powered by Stacks (more details later), it provides you with better internet, built on Bitcoin. Now that Stacks makes Bitcoin so programmable. While enabling decentralized apps and smart contracts that inherit all of Bitcoin’s powers.
So, with that in mind, do you think there is something else we can add? Well, if you need more support, you can Contact Us and let us know how we can help you. You can also share your different opinions, thoughts, suggestions, contributions, or even contribution questions in our comments section below. Until the next, thanks for taking the time to read this guideline.