Getting to Know the Application of Blockchain Technology

Talking about blockchain, it cannot be separated from the emergence of bitcoin currency. Bitcoin is a digital currency that resides in an open source P2P (peer-to-peer) payment network system. Bitcoin is an early phenomenon of the emergence of digital currencies and is not connected to the known currencies in circulation that are used today. Bitcoin is also known as cryptocurrency (crypto currency) which is a form of payment instrument that uses cryptography or special security algorithms to control the manufacture of Bitcoin.

The emergence of bitcoin began in 2009 with the appearance of an article entitled Bitcoin: A Peer-to-peer Electronic Cash written by someone using the name Satoshi Nakamoto. The article was posted on a cryptographic email (mailing list) forum. In the same year, someone bought a domain with the name and a year later the first bitcoins appeared.

The presence of bitcoin (crypto currency) is able to attract the attention of the financial world (financial). The attraction includes the existence of a purely digital currency value and the use of peer-to-peer networks to run a digital money system. Cryptocurrencies also allow a person to be able to transact with lower fees, faster payments, and not depend on financial institutions or governments. Another interesting thing about the emergence of cryptocurrencies is the use of technology that allows cryptocurrency systems to work, namely blockchain technology.

Some of the applications of blockchain technology include the following.

1. Cryptocurrency (Cryptocurrency)

Crypto currency is a concept popularized by Satoshi Nakamoto through Bitcoin currency. The concept of cryptocurrency is to create digital assets that can be used for transactions of goods and services, where digital assets in the form of cryptocurrencies are not created or controlled by one party (such as a central bank) but are regulated by a distributed system through blockchain technology.

In crypto currency systems, each user has a digital account called a wallet or wallet, containing a private key, public key and address. Cryptocurrencies are not minted by one party and transactions are not executed by one particular party. When two parties execute a cryptocurrency transaction, the amount of currency traded by the sending party is tied to the sender’s private key. The sender then transfers the currency to the recipient’s address.

This process binds the sent currency with the recipient’s private key. This transaction data is then validated by another user (third party) where this third party will receive a small amount of currency as a validator fee. Finally, the validated transaction data is added to a blockchain ledger that can be accessed by anyone. Therefore, cryptocurrency transactions have high transparency and security.

2. Smart Contract

Traditionally, a contract is an agreement document between two or more parties which includes the terms and agreements between the parties. One type of document is a document containing the transfer of assets. For example, buying and selling documents.

In smart contracts, the terms and agreements in the contract are converted into code so that the computer can validate whether the terms and agreements have been met, and then carry out the process of executing the contents of the contract as needed. With blockchain technology, users other than parties directly related to the contents of the contract can become contract validators, by lending the computing resources needed to run the smart contract process.

An example of implementing smart contracts is Ethereum, an open-source computing platform that allows users to create smart contracts and pay other users as validators.

3. Supply Chain Management

Similar to smart contracts, in supply chain management products are given digital tags, such as QR codes. While the product runs along the supply chain, the product movement from one stage to another is done using a private-public key.

Transfer transactions are then recorded into the blockchain, which allows users to track product movements from production, distribution, retail to end-user stages. In this case, the blockchain plays the role of overseeing the product trajectory and data storage. For the safety of the product itself, especially non-digital products, it is necessary to use other technologies.

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