Compared with normal apps, the blockchain-based app is popular for its security. To figure out why a blockchain-based app can protect user privacy and how it works, first, we need to know what is blockchain.
What Is Blockchain and How Does It Work?
What is Blockchain Technology?
To have a brief understanding of blockchain technology at the simplest level, it is actually just a chain of blocks, but not in the traditional way of understanding these words. When we use the words “block” and “chain” under this context, we are in fact talking about digital information that we are using nowadays. The block refers to the digital pieces of information which are stored in the chain in terms of a public database. To get a more in-depth understanding of “block”, we can understand it in the following ways.
The digital information stored in “block” normally includes trading information or transaction information, such as the time, the price, the product of your most recent purchase from online retail websites. Blocks store information about all the participants in the transactions process. A block for your purchase from online retailers would record your name along with those shopping websites. Instead of using your actual name, your purchase is recorded without any identifying information but using a “digital signature”, which is like a nickname or username.
Blocks store information that can help distinguish them from other blocks. For example, user A and user B have names to distinguish us from one another, each block stores a unique code that allows us to tell it apart from every other block. These codes used by the blocks are cryptographic codes created by special algorithms. To explain, let’s say you made your purchase online, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the information about your new transaction would look almost the same as your earlier purchase, we can still tell the blocks apart because of their different codes. This example is for you to have a brief idea of the blockchain working process, but in reality, things may be more complicated than that.
How Does Blockchain Work?
When there is a block storing new data, it is added to the blockchain. Just like its name, blockchains consist of various blocks strung together. However, in order to add a block to a blockchain, the following steps must happen.
Firstly, there must be a transaction. If we continue with the example of buying stuff online, by clicking on multiple payments prompts in a hurry, you’ve violated your better judgment and bought something. As we discussed above, in many cases, a block may group thousands of transactions together, so your online purchase data will be packaged in the block along with other users’ transaction data.
Secondly, the trade must be validated. After purchase, your transaction must be verified. For other public records, such as Wikipedia and your local library, someone will be responsible for reviewing new data entries. With blockchains, however, that task is left to the computer network. When you buy something on the internet, the computer network rushes in to check that your transaction is going the way you said it would. That is, they confirm the details of the purchase, including the time of the transaction, the amount of the transaction, and the participants.
Then, the deal must be stored in a block. When your transaction is confirmed to be accurate, it is approved. The amount of the transaction, your digital signature, and Amazon’s digital signature are all stored in a block. There, the deal could join hundreds of others. You must give the block a hash. Just as angels get wings, once all transactions in a block are verified, it must be given a unique identifying code called a hash. The block also gets a hash of the blocks that were recently added to the blockchain. After hashing, you can add blocks to the blockchain.
What Applications is Blockchain Technology Used On?
Blockchain-based Apps for Cryptocurrency and Payment
Due to the high security of blockchain technology, it’s understandable for blockchain technology to be used flourishingly in currency and payment. Along with the uprising of Bitcoin, multiple digital currencies rush to the market, including TOP.
Blockchain-based Apps for Product Tracing
Blockchain technology works best on reliable tracing. For example, a blockchain-based application in the field of medical care is helpful to reduce prescription medicine fraud and integrate medical information. Blockchain is capable of effectively and reliably tracing all transactions in a transparent way.
Blockchain-based Apps for Supply Chains
Supply chains are also one of the fields that fit for blockchain since a blockchain has multiple entities whose smooth “cooperation” can never be achieved unless a perfect scheme is used. The blockchain ecosystem is able to provide secure, reliable, and integrated information to blockchain entities so as to avoid commercial fraud or commercial abuse. Credit data is beneficial for mid-small companies to acquire financial service, which is a hurting issue for traditional industries.
Blockchain-based Apps for Business
Blockchain is believed to be fit for multiple businesses. For example, a scientific information blockchain system can be established based on blockchain technology in order to reduce the cost of getting scientific information. The digital identity blockchain ecosystem is reachable to build reliable digital identities, reduce identity thefts, and increase citizen security so that all citizens will be able to implement high-price daily trade on the Internet.
What are Blockchain-Based Apps Like?
The essential advantage of the applications based on blockchain technology lies in their security and reliability.
First, new blocks, that is, users’ online information, are linearly stored in a chronological order, which means they are usually added to the “end” of blockchain. Take the blockchain of Bitcoin, it’s clear to see each block features a position that is called “height” that has reached 646,132.2 by August 2020.
With a block added to the end of the blockchain, it’s difficult to return and modify the content in the block. That’s because each block contains its own hash, together with the hash in the previous block. Hash is established by mathematical functions transforming mathematical information into character strings composed of numbers and letters. Once the information is edited in any way, the hash will be changed as well.
That’s why blockchain plays a useful role to keep security. If a hacker “seduces” you to pay twice for your online shopping by re-editing your transactions on the shopping website, you’ll be led to pay more than you should. Once your transaction amount is edited, however, the block’s hash will be changed as well. Nevertheless, the hash of the next block on the chain will stay unchanged so that hackers need to re-edit its content to hide their trace. As such, all the content of all blocks must be reedited. That’s too difficult for hackers.
Even if hackers just hide the content of blocks before and after a certain block. Huge and incredible computational ability is greatly called for recalculating all hashes. In other words, as long as a block is added to the chain, editing will become quite difficult and it’s impossible to delete it.
Then, another reason for the high security of blockchain-based applications lies in the proof of work system in which computers must “testify” they have completed their work by resolving the complicated mathematical issues. If a computer helps to resolve a partial issue, they’ll be qualified to add a block to the chain. However, it’s not so easy to add a block to the chain, which is also called mining in the field of cryptocurrency.
Why Is It Secure If Everyone Has Access to a Blockchain-based App?
You may notice that you do not have access to identifying information about the users making transactions. Although transactions on the blockchain are not completely anonymous, personal information about users is limited to their digital signature or username.
However, when a new block is added to a blockchain, everyone can view it, including you. If you look at bitcoin’s blockchain, you’ll see that you have access to transaction data, as well as information about when, where, and who, added blocks to the blockchain. So why do people like using it for security purposes?
That is because blockchains store data with sophisticated math and innovative software rules that are extremely difficult for attackers to decode. The whole process is very complex for hackers to manipulate. Therefore, the blockchain-based app is becoming more and more popular, and more people start to use it for the security of their transactions.