BLOCKCHAIN TECHNOLOGY

 

BLOCKCHAIN TECHNOLOGY
GS 3, MAINS: Science and Technology- developments and their applications and effects in
everyday life Achievements of Indians in science & technology; indigenization of technology and
developing new technology, Awareness in the fields of IT, Space, Computers, robotics, nanotechnology, bio-technology and issues relating to intellectual property rights.

 

IN NEWS: While many countries are embracing the blockchain phenomenon, India is yet to
finalise its stand on this technology. Although there is a stern stand against cryptocurrencies by the
Indian government, the same cannot be said for blockchain technology itself. Industries, along with
both the central and state governments are striving to set off a unique trend in the path of digital
transactions as well as in the online space.

 

Blockchain is a revolutionary technology that will enhance cybersecurity and change the way
businesses make transactions.

 First introduced in 2008 as the mechanism behind the crypto-currency Bitcoin, blockchain is
now recognized as the most influential technology for the future of business. More
specifically, for the infrastructure of future business transactions.

 The safety of adopting blockchain technology for businesses lies in the fact that it is a
distributed, rather than centralized network. For hackers, this means that in order to break
into a data source, they would need to break into all of the computers in the distributed
network at the same time.

 Current systems of banking are vulnerable to fraud. With blockchain technology, a middle
man such as a bank is not necessary.

 

WHAT IS BLOCKCHAIN TECHNOLOGY?
 A Microsoft Excel Sheet file in your computer or laptop with the details of some of your
transactions is known as a ledger. If your Excel file is copied to hundreds of your friend’s
computers and connected to each other forming a network, this is known as distributed
ledger.

 Imagine a technology to update this Excel sheet whenever you or your friends update a ledger. Blockchain is nothing
but a digital ledger, that is a book containing accounts to which debits and credits are posted from books of
original entry.

 A blockchain is an anonymous online ledger that uses a data structure to simplify the way we transact. Without
the help of third party blockchain allows users to manipulate the ledger in a secure way.

 

ADVANTAGES OF BLOCKCHAIN TECHNOLOGY
 It will allow smart devices to speak to each other better and faster.

 Blockchain mechanism brings everyone to the highest degree of accountability. Therefore,
solves the problem of manipulation.

 We can own the data that belongs to us, that is, an online identity and reputation will be
decentralised.

 It protects the identities of the users. This way blockchain is a more secure way to carry out
transactions. Each list of records in a blockchain is called a block. The various growing list of
records, i.e. blocks are linked and secured.

 It will allow middleman-free way to exchange asset and the removal of intermediaries that
are involved in record keeping and transfer of assets.

 It provides durability, reliability, and longevity with decentralised network.

 The data that are entered in blockchain based systems are immutable which prevent against
fraud through manipulating transactions and the history of data. Therefore, all the
transactions can be investigated and audited easily.

 

CHALLENGES TO BLOCKCHAIN TECHNOLOGY

 The virtual currencies that are based on blockchain technology are highly subjected to
extreme volatility. One good example for that is the fluctuating prices of Bitcoin that vary
from day to day. One of the reasons behind that extreme volatility is that both the
decentralized blockchain technology and the virtual currencies are extremely new to the
market; which means that the companies, investors, governments, and other groups
adopting or not adopting them will greatly affect the volatility.

 Because of the anonymity that exists in decentralized blockchain and virtual currencies
which rely on them, they have become a second home for all illicit transactions. One good
instance for that is “Silk Road,” a digital black market. People utilized this platform to
purchase things like illicit transactions using blockchain-based virtual currencies.

 To verify all the transactions, huge power, i.e. electricity is required.

 There should be security about the private key. Every time private key must remain secret
because revealing it to third parties is equivalent to giving them control over the bitcoins
secured by that key. Also, it is necessary to have a back up of the private key so that it can be
protected from accidental loss.

 Blocks in a chain must be verified by the distributed network and it can take time. So,
transaction speed can be an issue.

 

PREVIOUS YEAR QUESTIONS

  1. What is India’s plan to have its own space station and how will it benefit our space programme? (2019)
  2. How can biotechnology help to improve the living standards of farmers? (2019)
  3. With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy. (2018)
  4. Why is nanotechnology one of the key technologies of the 21st century? Describe the salient features of Indian Government’s Mission on Nanoscience and Technology and the scope of its application in the development process of the country. (2016)

 

 

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