Attached.

Running head: BLOCKCHAIN TECHNOLOGY

Blockchain Technology
Student Name
Institutional Affiliation

1

BLOCKCHAIN TECHNOLOGY

2
Abstract

A blockchain entails a spread of database records or public ledgers comprising of all
transfers and digital events that have taken place and distributed amongst the involved parties.
Every single transaction in the public ledgers gets verification from an agreement of many of the
participants in the system. Once the information is fed in the database, it can never get erased.
The blockchain comprises of every transaction that has taken place. Bitcoin is the most known
aspect of blockchain technology. However, the concept of Bitcoin has come up as controversial
in various ways but the technology has proven efficient largely in financial applications as well
as non-financial ones.

BLOCKCHAIN TECHNOLOGY

3
Introduction

A blockchain comprises of distributed database records as well as public ledgers of the
transactions taken place and digital events that have been carried out and spread out to all the
parties (Crosby et al.2016). Bitcoin is one of the most significant concepts under the blockchain
technology. It also comes up as controversial as it allows for transactions worth billions to take
place without the control of the government on the same (Pikington, 2016). Hence, it has a high
chance of facing regulatory issues that encompass financial governments and financial
institutions (Crosby et al.2016). However, blockchain technology has no controversies and has
proven efficient in its application in both financial and non-financial worlds. For instance,
Silicon Valley highlighted the blockchain distributed consensus model as a significant discovery
since the invention of the internet itself. Further, there are similar sentiments on Bitcoin
technology where many feel it should get recognized as a potential concept that will bring drastic
adjustments in the field of finance and beyond (Zheng et al.2017).
The digital economy currently in operation depends highly on a particular trusted
authority (Crosby et al.2016). Many of the online exchanges depend on the one who tells people
the truth. For example, an email service provider assuring the sender their email has reached its
destination, as well as a certification authority verifying if a particular platform could be trusted
(Zheng et al.2017). The primary idea is that people rely on another authoritative figure to assure
them of their security and privacy in the digital era (Pikington, 2016). However, the third party is
prone to the risk of hacking, manipulation, and compromise. Here, blockchain comes into play as
it can change the digital world through distributed consensus where every transaction that gets
carried out could become verified at any given time in the future (Zheng et al.2017). The
verification gets carried out without the interference of privacy and digital aspects and parties in

BLOCKCHAIN TECHNOLOGY

4

question (Crosby et al.2016). The two aspects of distributed consensus and anonymity are the
primary concepts of blockchain technology (Zheng et al.2017).
The merits of blockchain technology surpass regulatory issues and technology
hindrances. One of the uses of blockchain technology is smart transactions (Crosby et al.2016).
Smart transactions are computer-related that help one to carry out terms of a contract. When the
outlines contractual agreements terms are met, then the parties involved automatically get
payment about the contract in a transparent way (Zheng et al.2017). Smart property is the other
way one gets to control the procession of a property using Smart Contracts. The properties could
consist of cars, houses, smartphones, or even shares of a company (Zheng et al.2017). Bitcoin in
itself is not a currency but provides a means for managing ownership of money.
Consequently, today, financial institutions have withdrawn their perception that the
blockchain technology model is a threat to traditional business (Zheng et al.2017). The big banks
in the world have begun to research in the field of blockchain to establish how they could apply
innovative blockchain in their operations (Crosby et al.2016). Lain Lohmus has tested that
blockchain has proved as the most efficient and reliable way of banking and financial
application. In the same way, blockchain technology provides for endless opportunities in the
non-financial field (Crosby et al.2018). The platform provides anonymity where data from
various fields could get stored in the form of a fingerprint instead of the asset itself, hence
enhancing privacy as well as security (Zheng et al.2017). Blockchain technology can become a
digital economy where the use of the internet increases to help in carrying out businesses,
sharing personal data and life events (Zheng et al.2017).

BLOCKCHAIN TECHNOLOGY

5

Internet commerce is entirely entangled to financial institutions who position themselves
as the third party whose primary task is to oversee and execute a given electronic transaction
(Zheng et al.2017). The responsibility of the third party is to protect and maintain transactions.
Online transactions consist of unavoidable frauds that require the third party to watch out for the
same (Zheng et al.2017). Bitcoin applies cryptographic proof in place of the third party for the
two willing parties to conduct an online transaction. Every transaction that takes place has
signature protection (Crosby et al.2016). The transaction made gets transferred to the public key
of the receiver who has a private key of the sender. For one to execute a transaction, the sender
with the cryptocurrency has to prove they own the private key (Zheng et al.2017). The receiving
end verifies the digital signature, hence ownership of the other party private key on the
transaction using the public key. Each transaction taking place gets noted in the Bitcoin network
and gets recorded in the public ledger once verified (Zheng et al.2017). Every transaction gets
verified before noting the same in the public ledger. Therefore, the verifying node ensures that
the spender owns the cryptocurrency, as well as they, have enough of the cryptocurrency in their
account (Crosby et al.2016). The question on the order of the currency has come up as the
transaction does not take place in the order they get generated. Thus, a system to ensure the
double-spending of the currency doesn't take place had to get implemented (Zheng et al.2017).
The Bitcoin system places the transactions in groups known as blocks and then
connecting the block in blockchain (Zheng et al.2017). The transaction in the same block is
considered to have taken place simultaneously. The blocks get joined together in a linear form.
However, there is a challenge as any node in the network could take up unconfirmed transactions
and develop a block and then take it to the network as a way of establishing the block that should
be the next in line (Crosby et al.2016). One cannot depend entirely on the order of the blocks as

BLOCKCHAIN TECHNOLOGY

6

they can arrive at differ...