What Is Blockchain Technology? A Complete Guide to Blockchain and Cryptocurrency

The boom of Bitcoin and alternative cryptocurrencies has spotlighted the blockchain technology on which these currencies are based.

One of the main concerns about the cybersecurity of computer systems is where to place the trust. A given application usually manages sensitive information by protecting a given node or device.

Through blockchain technologies, data can be securely stored without being managed by any single trust party, since data is added to existing records sequentially through a distributed ledger.

Blockchain innovation can be considered when searching for the best approach to storing and processing cloud data. This article discusses how blockchains can be used for cloud security.

What is Blockchain?

Blockchain is a decentralized and distributed digital ledger technology that securely records transactions across multiple computers. Each record, or “block,” is linked to the previous one through cryptographic hashes, creating a “chain” of blocks. Here are some key features of blockchain:

Key Features of Blockchain:

• Decentralization: No single central authority controls the blockchain, making it more secure and resistant to manipulation.
• Transparency: Transactions are visible to all participants in the network, ensuring openness and trust.
• Immutability: Once a transaction is recorded, it cannot be altered or deleted, providing a permanent and tamper-proof record.
• Security: Cryptographic techniques ensure the security and integrity of the data on the blockchain.

What is Cryptocurrency?

Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies issued by governments (like dollars or euros), cryptocurrencies operate on decentralized networks based on blockchain technology. Here are some key features of cryptocurrencies:

Key Features of Cryptocurrency:

• Decentralization: No central authority, like a government or financial institution, controls cryptocurrencies. Instead, they rely on a network of computers (nodes) to validate transactions.
• Security: Cryptographic techniques are used to secure transactions and control the creation of new units. This makes cryptocurrencies highly secure and resistant to fraud.
• Transparency: All transactions are recorded on a public ledger called a blockchain, which is accessible to anyone, ensuring transparency and trust.
• Anonymity: While transactions are transparent, the identities of the individuals involved in the transactions can remain anonymous.

Some popular examples of cryptocurrencies include Bitcoin, Ethereum, and Ripple. These digital currencies are used for various purposes, such as online transactions, investment, and as a medium of exchange within certain digital ecosystems.

Cryptocurrencies have gained popularity due to their potential for high returns, ease of use, and the promise of financial freedom from traditional banking systems. However, they also come with risks, such as price volatility and regulatory uncertainties.

What is  Blockchain in Cloud Computing?

The blockchain is a distributed public ledger and Internet-based computer network. Every computer on it is called a node and has to record every verified transaction or contract. 

The security properties of blockchain drew the attention of cloud computing companies always looking for ways to improve security. The spotlight is on the Internet of Things (IOT) and it is for many reasons:

• IOT already runs on an infrastructure similar to blockchains. It is a network of connected devices and things, that can become blockchain nodes.
• IOT devices that use minimum hardware resources, without any local storage, require cloud-based servers to operate properly. This way these devices largely depend on security measures applied on the cloud level. On a decentralized blockchain-backed cloud, these devices are blockchain clients.
• Blockchain can also improve cloud storage. Such networks are already present, and they boast significant improvements in security, speed, uptime, and scalability.
• Millions of peers in such a network would be a platform where those in need of more storage would hire free memory space from other users’ devices.

How does blockchain improve Storage? 

Most people are not aware of that as the amount of data required per person is still relatively small, but with the IoT and the multiplying number of sensors and connected devices that will send data to cloud networks, it will become a real problem in just several years. 

1. Eliminate Storage Limitation 

• Storage limitation is already an impediment for 4K UHD television development: most TV networks aren’t eager to introduce these high resolutions, as storing 4K content is still economically unviable.
• A possible solution is to hire unused data storage on other connected devices across the globe. 
• There are millions of unused terabytes on computer hard disks, solid storage of laptops, mobile phones, and tablets. Those renting unused space over a blockchain-based network will be rewarded with cryptocurrency. 
• Letting excess storage for use by others via a secure blockchain is comparable to “mining” cryptocurrencies. The main difference – instead of selling unused CPU and GPU power, the end-user rents their free disk space and the link to it. 
• The conception is thus called proof-of-space. The value/price of a single cryptocurrency token is defined by the current storage supply and demand.

2. Sharing Space

• The space-sharing concept isn’t new, but it was previously seen as insecure.
• Let’s take BitTorrent as an example. It is a distributed, peer-to-peer network where people exchange their locally stored data. 
• However, it is primarily used for the illegal distribution of copyrighted content and software. Many files there – even those non-counterfeit might be illicit and contain spyware. 
• Most users regard BitTorrent as entirely illegal or shady, though it isn’t. But these are indeed insecure. 
• Local computers in most cases only offered some essential data protection, and often there was no protection on local computers at all.

3. Data Storage Demand in Numbers

• Information about the storage capacity of all computers and handhelds in private use is hard to find. But In 2017 alone 400 million hard disks and 200 million solid-state disks were shipped worldwide. 
• Assuming the average capacity of these disks to be 1TB, this equals 600 million terabytes. Multiply it by 5, which is the number of years an average hard disk lives, and you get 2500 exabytes. 
• Do not forget that, all the mobile phones, memory cards, USB pen sticks, and similar local storage. These can be a meager portion of the global data storage supply but combined they represent a hidden treasure yet to be discovered and mined.

4. The Future of Technology

• Blockchain can be much more secure while keeping all advantages of distributed, peer-to-peer computing. 
• The proof-of-storage blockchain technology will also let individuals make an additional income by setting up mini data centers at home. 
• This may change the future of cloud companies which should invest less in big data centers and switch to hiring storage from many individuals. It all will be helped by the expansion of fiber optic broadband and 5G mobile networks, as well as fast solid-state disk (SSD) storage that can make mini data centers inexpensive to build.
• Big data centers would, however, remain around to store important data from enterprises, government agencies, and other large clients.

Conclusion:

Blockchain technology has emerged as a transformative force across various industries, including cloud computing and cryptocurrency. Its decentralized nature, secure data transactions, and transparency make it an ideal solution for addressing the challenges of cybersecurity and data storage. As businesses continue to shift towards cloud-based systems, the integration of blockchain technology is poised to revolutionize the way data is stored, shared, and secured.

FAQ

What exactly is blockchain technology?

Blockchain is a decentralized, digital ledger that records transactions across multiple computers. It ensures data security, transparency, and immutability, making it a powerful tool for various applications like cryptocurrencies, supply chain management, and finance. 

What is a real life example of a blockchain?

A real-world example of blockchain technology is cryptocurrency. Bitcoin, the most well-known cryptocurrency, uses blockchain to record and verify transactions securely and transparently.  Every transaction is added to a public ledger, ensuring its authenticity and preventing fraudulent activities.

What is blockchain actually used for?

• Cryptocurrencies: Powering digital currencies like Bitcoin and Ethereum.
• Supply Chain Management: Tracking the origin and journey of products.
• Smart Contracts: Automating and enforcing contractual agreements.
• Voting Systems: Ensuring secure and transparent election processes.
• Healthcare: Managing patient records and ensuring data privacy.
• Finance: Streamlining cross-border transactions and reducing fraud.

What currency is used in the blockchain technology?

Cryptocurrencies, like Bitcoin and Ethereum, are used in blockchain technology. These digital currencies operate on blockchain networks and are used for transactions, investments, and as a medium of exchange within various blockchain applications.