Blockchain technology, which began its advent as disruption, has gained the stature of a transformational force considering the multiple utilities it provides and the use cases it can serve across horizontals and verticals, given the key features of blockchain. In this article, we will explore and understand what a blockchain is and, how it works, some of the key features of blockchain that make blockchain what it is today.
What is Blockchain?
Blockchain is a distributed database over a network of computers where data can be safely stored, making it impossible to change or manipulate. In other words, a blockchain is simply a digital record of transactions replicated and spread across the blockchain’s network of nodes or computer systems. Each block on the chain contains several transactions, and whenever a new transaction takes place on the blockchain, a trace of that transaction is added to the ledger of every participant. Distributed Ledger Technology is a decentralized database administered by several individuals (DLT).
The three key technologies that make up the blockchain are a digital ledger, a peer-to-peer network, and cryptographic keys. The two types of cryptographic keys are private keys and public keys. Both of these keys are held by each person or node and are used to generate digital signatures.
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The key feature of blockchain technology is this digital signature, which serves as a specific and secure reference for digital identity. The owner’s digital signature serves as the authorization for every transaction.
List of Top 11 Blockchain Characteristics
- Enhanced Security
- Distributed Ledgers
- Consensus Algorithms
- Faster Settlement
- Increased Capacity
- Cannot be Corrupted
The Top 11 Key Features of Blockchain
So, what are the features of blockchain? Let’s find out about the key blockchain features and benefits!
Immutability is the quality of not being able to be altered or modified. It can be considered one of the top key features of blockchain technology. One of the best aspects of the blockchain is that it ensures the technology will continue functioning as a stable, unchangeable network.
One of the key features of blockchain is the creation of immutable ledgers. Any centrally located database is vulnerable to fraud and hacking since it relies on a third-party intermediary for security.
This Blockchain feature works through the presence of nodes. Blockchain technology works via a network of nodes. A node is one machine that runs the blockchain’s software to verify and preserve the whole record of whatever transactions occur on the network.
A copy of the digital ledger is stored on each network node. Each node evaluates a transaction before adding it to the network, and if the majority of the nodes agree that it is valid, the transaction is added. This indicates that no transaction blocks (group of transactions) can be added to the ledger without receiving the consent of the majority of nodes. Any records that have been validated are final and cannot be altered. This implies that it won’t be editable, modifiable, or deletable by any network user.
It is reasonable to anticipate that this key feature of blockchain technology can significantly alter many situations where there is a need to eliminate corruption or manipulation. Therefore, nobody would be able to hack into it, change it, or even steal information if businesses started using blockchain to operate their internal networking system. Immutability as one of the blockchain features also helps in granting traceability of transactions.
How does it Fight Corruption?
Governments are frequently forced to choose between efficiency and fairness in their service delivery. Unfortunately, preferring one over the other frequently increases the likelihood of corruption. Among blockchain features and benefits, there’s the fact that blockchain has the potential to revolutionize anti-corruption efforts. Whether or not it is successful is largely determined by contextual factors such as infrastructure, legal systems, and social or political settings rather than by the technology itself. For a variety of reasons, public procurement is vulnerable to corruption. Parties involved in the procurement process, both public and private, are induced to commit corrupt acts by the size of potential financial gains.
Blockchain has the potential to mitigate these flaws at nearly every stage of the procurement process. A blockchain is intended to function in environments where trust in data/code outweighs trust in individuals or institutions. Transparency is frequently mentioned as one of the benefits of blockchains. It is a necessary component of both the blockchain and any anti-corruption effort. In an open blockchain, all transactions are searchable. In addition, blockchain can encourage a broader coalition of stakeholders to participate in and monitor procurement cycles. Blockchain integration projects, such as this pilot program in Colombia, conclude that “blockchain-based e-procurement systems provide unique benefits related to procedural transparency, permanent record-keeping, and honest disclosure.”
In addition, inefficiencies in land titling systems are a significant source of corruption. As a result, several countries, including Honduras, Brazil, and Ghana, have proposed blockchain-based land registries. Georgia registered over 1.5 million land titles using its blockchain-based system in 2018.
In a blockchain, there isn’t a single individual or organization overseeing the framework. The network is decentralized since a collection of nodes maintains it. One of the most important features of blockchain technology that grant it the status of disruption is this, given how it proves a great alternative to centralized systems. Users are put in a clear position of authority by the blockchain. This key feature of the blockchain benefits us so that we can immediately access the system via the web and put our assets there because it doesn’t need any regulating body or third party.
A decentralized network like blockchain has many benefits, such as a much lower chance of failure and greater security as blockchain operations are automated and do not require much human control, resulting in a lower chance of failures or errors.
Another major benefit of this key feature of blockchain is that there is no single point of failure because the decentralized system distributes each database among numerous nodes worldwide. As a result, the blockchain will remain secure even if any computer is compromised. This key feature of blockchain also provides complete transparency to the users.
Blockchain’s decentralized nature allows users to manage their assets and data independently. They are not dependent on a third party to care for their assets. They may all complete it concurrently on their own.
Uses of Decentralization
With decentralization being one of the key features of blockchain, no one needs to know or trust anyone else in a decentralized blockchain network. Each network member has a copy of the exact same data in the form of a distributed ledger. If any one member’s ledger is somehow altered or corrupted in any way, the majority of network members will reject it.
Companies are generally involved in both external and internal data exchange. Decentralization improves data access while also ensuring security and accountability.
Decentralization can reduce the severity of flaws in frameworks that rely too heavily on explicit workers. These weak points could result in critical failures, for example, the inability to provide guaranteed administrations or wasteful assistance due to asset weariness, intermittent blackouts, bottlenecks, a lack of adequate motivations for excellent service, or fraud.
By providing a new transaction model, blockchain has emerged as a powerful tool for reinventing value chains in the global economy. Because blockchain is decentralized, all transactions can be transparently viewed by either having a personal node or using blockchain explorers, which allow anyone to see transactions taking place in real-time. Every node maintains its own copy of the chain, which is updated as new blocks are confirmed and added. This means that you could follow Bitcoin wherever it goes if you want to. Transaction decentralization refers to B2B transactions that are more transparent, trustworthy, and efficient.
Now that you got a gist about the uses of decentralization, want to learn more? In reference to these check out Advantages and Disadvantages of Decentralization For 2023 & Types of Decentralization
3. Enhanced Security
No single node can alter any blockchain properties or records for their benefit since there is no longer a requirement for a central authority or intermediaries to facilitate transactions. An additional layer of protection is provided for the system using encryption via hashing and cryptography.
The blockchain’s records are all individually encrypted. The blockchain network’s entire process is made more secure by using encryption. This is one of the key features of blockchain technology as we know it, as it provides a safer space for users compared to the current form of the internet (Web 2.0).
Another key benefit of blockchain technology’s safe environment is that every few minutes, the blockchain network automatically verifies and updates itself; this aids in the creation of a self-reviewing system. It aids in offering a very stable system. All data is public because it is incorporated inside the network. As a result, it contributes to transparency.
Anyone attempting to change the block data on the blockchain would require a significant amount of computer power before the rest of the network could react. This shows that it is extremely hard for hackers to penetrate and compromise the network.
The consensus mechanism via which a blockchain validates transactions allows an additional layer of security. The combination of hashing algorithms, public-private keys, and consensus mechanisms helps to make security one of the key features of blockchain.
4. Distributed Ledgers
A distributed ledger like blockchain will typically give you all the details about a transaction and the parties involved. There is nowhere to hide because everything is visible. However, the justification for a private or federated blockchain is rather different. A blockchain’s database is stored on every node on its network and is immutable, open-source, and transparent.
Public ledgers make details of transactions and participants available to the general public. Unlike private or federated ledgers, which can also be linked to a blockchain system, these ledgers lack security or authority. This is so that all other system users can maintain the network’s ledger. Anyone with the necessary access can view the distributed ledger, which increases the process’s transparency and dependability.
This key feature of blockchain also has many benefits, such as the fact blockchain ledgers are tamper-Free. Ledgers are created in a way that makes it impossible for anyone to alter the ledger, and updates occur practically instantly. There is also no kind of bias with distributed ledgers. This is one of the key features and benefits of blockchain technology. Nobody using the network can receive special favors or encounter any form of bias from the network nodes. The process for adding blocks is the same for everyone.
5. Consensus Algorithms
The decentralized in a blockchain happens successfully due to its consensus algorithm. It is a distinctive trait and an essential component of any blockchain. Consensus involves a validation process within the group of active nodes involved in the network’s decision-making process. The nodes can reach an agreement in this situation pretty rapidly.
The consensus assists the network in reaching choices quickly and impartially. The consensus mechanism helps make the decision-making process swift, prompt and efficient. The algorithms that run at its heart can be trusted even if the nodes do not trust one another. Because of this, every action taken on the network favors the blockchain. There are numerous available consensus algorithms, like Proof-of-Work, which the Bitcoin and Ethereum networks use, Proof-of-Stake, Proof-of-Authority, etc., each having advantages and disadvantages. A consensus method is necessary for any blockchain, or else it will start to lose the key blockchain features for which it is valued.
Miners or network validators validate transactions using the consensus mechanism. For instance, in the Proof-of-Work consensus, miners compete to solve complex computational problems to find the unique hash that will represent the transaction block on the blockchain. The miners put in resources and computational power as ‘proof’ of their contribution to the network, eliminating the bad actors. The transactions are validated when the nodes check the database to test whether the transactions can be approved.
If any hackers dare to try their hand at corrupting the network in any way, they would have to have control over approximately 51% of the network nodes to be able to change them and be remotely successful. The whole process of hacking and trying to gain control of millions of computers to change up the millions of copies that millions of people across the globe have access to is an almost impossible feat.
6. Faster Settlement
Blockchain offers faster settlements compared to traditional banking systems. This key feature of blockchain technology has a lot of benefits and is one of the many unique features that sets blockchain apart.
Because they typically take days to complete and take an awful lot of settlement time, conventional banking systems are incredibly slow. One of the key causes for these banking institutions need to modernize their banking systems is this. Blockchain can help us overcome this issue by quickly resolving money transfers. In the end, this saves these institutions a tonne of time and money and offers ease to the customer.
Banking makes great use of blockchain. Currently, a user repeatedly verifies his identification with each bank he visits. The use of blockchain can make the overall procedure much faster and easier for users around the globe. For instance, Ripple assists hundreds of banks around the world in real-time settlements.
Faster settlements are one of the main features of blockchain. To put it another way, it eliminates the middleman to increase transactional effectiveness and speed. This key feature of blockchain benefits its users in such a way that it helps businesses keep track of data and blockchain transactions. The scope expands with transaction speed.
7. Increased Capacity
One of the main features of blockchain technology is that it increases the overall network capacity. It provides a much stronger system than a few devices in the centralized system due to the collective working of a group of computer devices. The ledger size is expected to grow rapidly, reaching 6.5 TB by January 2023. It will necessitate the purchase of larger disc space in order to participate in the network. Despite its enormous capacity, this technology provides greater security because the system cannot be shut down.
While the most secure systems are vulnerable to hacking, the blockchain network is extremely secure due to a large number of computers (known as nodes) that confirm every transaction that occurs on this network. There is nothing like a single workstation or computing device in this technology. Instead, you have a vast array of computers that collaborate in a more linear manner. Every transaction is protected by asymmetric cryptographic encryption. A perfect example of this increased capacity is a Stanford University project that developed a supercomputer that simulates protein folding for medical research.
8. Cannot be Corrupted
Key features of blockchain include that it is searchable and can be used to track all cryptocurrency transactions because it is a public ledger of all cryptocurrency transactions. In contrast to traditional money, the lack of anonymity and tight traceability makes corruption more difficult. Furthermore, there is no central authoritative body. Blockchain allows for the decentralized and efficient storage of data, and it has the potential to address corruption issues. A smart contract contains logical clauses programmed in code that initiate processes based on contract terms. These terms could specify the conditions that must be met in order for funds to be released, the dates on which they can be made available, and so on. Contract fulfillment aids in the avoidance of unnecessary expenses.
Due to the decentralized nature of public blockchains, network participants must be able to agree on the shared state of the blockchain. Unanimous agreement among network nodes results in a single blockchain containing verified data (transactions) that the network claims to be correct, and makes for one of the key features of blockchain technology. Even if some of the nodes are not following the rules or are untrustworthy, the majority must agree.
With blockchain’s dynamically changing status, to ensure that all network transactions are genuine and each participant agrees on a consensus on the blockchain’s status, the technology requires an efficient, fair, real-time, functional, reliable, and secure mechanism. Blockchain works by adding blocks of data to the chain, and the essence of consensus is to ensure that every block added to the chain is the one and only version of the truth that all nodes in the system agree on.
Blockchain is being used as the new standard for transparency. This is because blockchain features and benefits include making data open/transparent in ways that have not previously existed in financial systems. A block explorer allows network participants to access the holdings and transactions of public addresses. A block explorer is used to search the blocks of a blockchain, their contents, and their relevant details. Every blockchain is made up of multiple blocks, and each block contains data, which is a record of transactions. The key point is that the chain is not owned by a single person or entity.
The technology enables traceable and unchangeable transactions, allowing parties to trade with complete confidence without the use of an intermediary. The records stored in the blockchain are, of course, encrypted. This means that only the record’s owner can decrypt it and reveal their identity (using a public-private key pair). As a result, blockchain users can remain anonymous while maintaining transparency.
The process of creating new coins by authenticating data, creating new blocks, and recording the information onto the blockchain via a “proof of stake” protocol is known as crypto minting. When asked ‘what are the features of blockchain?’, this one definitely ranks among the top blockchain features and benefits. On a blockchain, you can create coins and tokens. Blockchain platforms such as Ethereum, Bitcoin, and Dogecoin allow you to mint coins easily. You can use the coins you mint to transact and receive cash from other network users.
It is important to note that newly issued cryptocurrency tokens are traded in the market. The Proof of Stake consensus mechanism, which defines the formation of blocks through staking, is a distinct highlight of the crypto minting method. The Proof of Work consensus mechanism, on the other hand, favors the crypto mining procedure. Users who mint cryptocurrency are referred to as validators rather than miners. Because blockchain is decentralized, anyone interested in creating crypto tokens can use crypto minting without relying on centralized regulatory authorities.
For quite some time now, it has definitely made its mark across various existing and prominently established industries and has managed to become a mainstream phenomenon that is gaining more traction day by day. Blockchain is at the heart of the development of popular concepts such as the metaverse and web3 due to its key features and all the benefits they provide, such as transparency, trustworthiness, and tamper-proof qualities. It is crucial to improving commercial and governmental processes’ safety, effectiveness, and efficiency.
The concept of blockchain is still being built upon and modified every day, with new and unique features constantly introduced to provide users around the globe with better technology, so you should keep yourself updated about any new changes of such nature!
Frequently Asked Questions (FAQs)
1. What are the Four Key Features of Blockchain?
Blockchain is a distributed database. It can be safely stored across a network of computers, making it impossible to change or manipulate. In other words, a blockchain is merely a digital record of transactions that have been replicated and distributed across the blockchain’s network of nodes or computer systems. Four key features of blockchain technology are:
- Increased capacity
- Enhanced security
2. What is an Attractive Feature of Blockchain?
Blockchain networks are immutable by definition. This is one of the benefits of public blockchain platforms. When it comes to businesses, data must sometimes be changed. Enterprise blockchain can allow for this as long as all network owners and stakeholders grant permission.
3. What is the Main Function of Blockchain?
The ability to create immutable ledgers is one of the key features of blockchain technology. Because security is provided by a third-party intermediary, any centrally located database is vulnerable to fraud and hacking. Blockchain technology is powered by a network of nodes. A node is a single machine. It runs the blockchain software to verify and preserve the entire record of all transactions that occur on the network.
4. What are the 5 Advantages of Blockchain?
The 5 blockchain features and benefits are:
- It cannot be corrupted
- It ensures the faster settlement of transactions
- It increases the capacity of the whole network
- It ensures enhanced security of the network
- It is decentralized in nature. Hence, it is free of the control of any centralized authority
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Last Updated on November 28, 2023