The 21st century is circled by technology. With the growing need for modernization in our daily lives, people are open to accepting new technologies. Technologies like augmented reality and IoT have gained momentum over the past decade and now have a new addition to the pack, namely blockchain technology.
Blockchain technology is a system for recording information that makes it difficult or highly impossible to modify, hack, or cheat the system. In simple words, blockchain is a data system that secures transactional records, transparency, and decentralization. The first successful and prominent application of blockchain technology was popularised in the year 2009 by Satoshi Nakamoto. He invented the first digital cryptocurrency Bitcoin through the use of Blockchain technology.
A blockchain is basically a digital register of transactions that is copied and distributed across the entire network of blockchain computer systems. Each block in the chain contains multiple transactions and whenever a new transaction takes place in the blockchain, a record of that transaction is added to each participant’s register book. The dispersed database distributed by multiple participants is known as distributed ledger technology (DLT).
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How does a Blockchain work
The main purpose of blockchain is to allow virtual information to be recorded and distributed but not modified.
A blockchain is a chain of blocks that accommodates data or info. In a blockchain network every block stores some info along with the hash of its preceding block. A hash is a mathematical code that belongs to a spectacular block. If the data inside the block is modified, the hash of the block will also be subject to change. Blockchain makes the connection of the blocks secure through unique hash keys.
When transacting on a blockchain, some buds are present and these buds validate these transactions. In the Bitcoin blockchain, these buds are known as miners. But the transaction will take place only when the hash is correct. If a hacker tries to hack the network and change any information of blocks, the hash of the block will get notified.
How blockchain allows transactions
- A blockchain network uses public and private keys to create a digital signature that ensures security and compliance.
- Once the verification is assured through these keys, then approval is required.
- Blockchain grants the participants to take part in mathematical verification and reach a consensus to agree on a particular price.
- The block of information is communicated through the network and the validation process arises.
- While a transaction takes place, the operator uses their private key and declares the transaction information over the network.
- In order to process the transaction, miners all over the network start solving the mathematical puzzles to invest their computing power.
- By solving the puzzle first, the miner is awarded with bitcoins.
- When a new block is added to the chain, the existing copies of the blockchain are upgraded on the network.
The advantages of Blockchain Technology
- Every participant’s data is sensitive and crucial. Blockchain protects the info with enhanced security.
- The transparency of blockchain is much greater than other networks.
- Instant traceability.
- The efficiency and speed of blockchain are time-consuming.
