Blockchain is a technology which is decentralized, distributed, and immutable in nature that facilitates the process of recording transactions and tracking assets using a peer-to-peer network.
🚀What is Blockchain?
Blockchains are increasingly popular nowadays, but what are they exactly? As the name implies, networks of information-containing blocks make up a blockchain. In order to make it difficult to alter or backdate digital documents, this method was first proposed by a team of researchers in 1991.
It is comparable to a public notary service. It was largely idle before Satoshi Nakamoto utilised it in 2009 to create the digital currency Bitcoin. Blockchains are open-distributed ledgers that anybody can access. Blockchains have the remarkable property that once data is recorded there, it becomes extremely difficult to modify it.
🤔But, How does Blockchain work?
Let us dive deep into how the blocks are working to make a blockchain.
Each block has a number of different components, including data, a distinct hash, and the hash of the block before it. Interesting, right?
The data that are stored within a block depends on the specific blockchain in use. For example, we all have heard about Bitcoin. So, in bitcoin each block stores data about a specific transaction such as the sender, recipient, and the quantity of coins involved.
In addition to the data, each block is assigned a unique hash, which is similar to a fingerprint. This hash allows for the identification of the block's contents and is always unique.
Just like, you and each of your family members have a different fingerprint. And, that's why there is a feature in our electronic devices to unlock from Fingerprints. Most of us use it because it's secure and, faster. So, let's get back to understanding what's happening inside the blockchain.
So, Once a block is created, its hash is calculated. If you have studied hashing techniques while studying Data structure and algorithms then, you might be well aware of this, else you can simply google it.
So, Any changes made to the block will also result in a change to the hash, making hashes a valuable tool for detecting changes.
If the fingerprint of a block changes, it is no longer considered the same block.
As a result, the hash of the previous block helps in connecting each block to its previous block, hence creating a secure chain of blocks. That is the reason why blockchain technology is more reliable and strong and that's how it creates a safe and steady chain of blocks for its users.
🦄Advantages of using Blockchain!
There are various advantages to using Blockchain Technology. These include :
More security and transparency: Because every node has a copy of the chain and can trace the history of the blocks, blockchains are transparent. Blockchain explorers enable anybody to inspect the details of each blockchain transaction and the new blocks produced.
Accurate tracing of data: While the identity of users might be kept anonymous, all of their transactions are traceable. As a result, many of the stolen coins have been recovered in instances when bitcoin exchanges have been hacked since the blockchain data reveals where they were transferred or used.
Faster payment processing: As there is no single centralised owner, blockchains are resilient to failure. Peer-to-peer networks' distributed architecture enables quick transaction speeds while eliminating the need for a middleman to handle transactions. For instance, financial institutions are increasingly using blockchains to handle cross-border transactions, particularly between nations without a developed payment infrastructure. Blockchain networks and cryptocurrencies enable users to securely store and transfer their financial assets in areas with unpredictable fiat currencies or financial institutions.
Immutable data: This means if data is put in a block of a blockchain, then it cannot be altered. This makes it more secure as no one can alter the data for unfair means.
Privacy: As every user is anonymous in a blockchain network, hence it highly keeps into account your privacy. And, it's safe too.
I hope from this article you got some basic idea about blockchain technology!
You can ask your doubts and also write your reviews in the comment section.
Till then keep learning, See you in the next article.