The blockchain technology has been a hot topic among the masses for the past few years.
There is no doubt that this technology has revolutionized the IT industry by introducing a new method of transferring intellectual property or money digitally without spending any extra dues.
The use of this technology is increasing and people have now started trusting on it, but still, with all of the popularity, there is still a huge amount of people who are unfamiliar with the functions of blockchain technology and how they can use it. I am writing this article to clear your doubts about this technology and I hope you can now better understand the blockchain technology. let’s start with the most commonly asked question.
What is Blockchain Technology?
Blockchain technology is generally used by cryptocurrencies. Satoshi Nakamoto has adapted this technology to create and apply the cryptocurrency known as Bitcoin. This technology is a dispersed ledger accessible to everybody. Once you have recorded the data in a place, you cannot change it. Its functions are like a digital attorney with timestamps to avoid information interfering, it uses the blocks just like spreadsheet uses “columns” and “rows”.
In a blockchain, a block is said to be the data collection. In this technology, the data is added to the block, by linking it with other blocks in sequential others generating a blockchain connected together. In this technology, the first block is known as the Genesis Block.
Blockchain is a distributed ledger that means a record is spread across the network amongst all network’s peers, and every peer holds a complete ledger’s copy. The technology is very safe as it is nearly impossible to hack or tamper the transactions in this technology. It offers users with the whole transparency on where their reserves go; it is a completely safe and authentic tool that can act as an auditing mechanism, detailing and recording all dealings that have happened on the related chain. Additionally, you can also transfer funds in a few minutes.
this technology has revolutionized the IT industry and many of the IT companies have started using the blockchain technology. In technologies like IoT, Artificial Intelligence, Cloud Computing, Web Hosting, Big Data, etc. the use of Blockchain can increase the overall impact of these technologies on the economy.
Key Attributes of Blockchain
The major attributes of Blockchain technology are as follow that proves blockchain is better than traditional ledger systems:
Peer-To-Peer: There is no dominant authority to operate or control it. All members can directly talk to each other. This allows direct data conversation with third-parties participation.
Cryptographically Protected: Cryptography is used for the security services to tamper-proof their record.
Distributed: The ledger is spread transversely the complete network that also makes the tampering hard.
Add-Only: In this technology, the data is only added in time-sequential order. This property suggests that when data is inserted in the blockchain, it is nearly impossible to transform that information and can be measured practically absolute.
Consensus: it is said to be the most serious attribute of the blockchain technology. This offers blockchain the aptitude to appraise the ledger through consensus. It is where it gets the decentralization power. No dominant authority is the controller of the ledger updating. In its place, any update is authorized against strict standards defined by the protocol and added to the blockchain technology once a consensus reached amongst all participating network nodes.
How Does It Work?
In the blockchain technology, a transaction is started by a node by first creating and then numerically signing it with its private key. In this technology, a transaction can signify numerous activities. Most usually this is a structure of data that signifies value transfer among users through the blockchain network. Transaction data structure typically comprises of value transfer, relevant rules, destination and source addresses, and other authentication data.
A flooding protocol is used to propagate a transaction known as Gossip protocol, to peers that authenticate the transaction depend on the preset standards. Typically, more than one node is needed for transaction verification.
After a transaction is authorized, it holds a block that is propagated onto the system. At this time, the transaction is measured as confirmed.
The new block now turns out to be a part of the ledger, and the following block cryptographically connects back to this block. This connection is known as a hash pointer. At this point, the second confirmation of the transaction is made and the block gets its first validation.
Every time a block is formed, Transactions are reconfirmed. Generally, 6 approvals are required in a network for the final transaction.
Some Important Points to Consider
- A Blockchain is like a spreadsheet or a diary that contains data of transactions.
- A hash is said to be a string of letters and numbers.
- The hash not just based on the transaction but the earlier hash of the transaction.
- Nodes check to validate a transaction has not been altered by examining the hash.
- Every block denotes a prior block and they jointly make a Blockchain.
- These computers are known as nodes.
- A hash is generated by each transaction.
- Order of transaction is very significant because the transactions use the same order for entering, in which they happened.
- In a transaction, a small modification generates a totally new hash.
- If a majority of nodes accept a transaction then it is printed into a block.
- It is an effective technique as it is spread over numerous computers, and every computer has a Blockchain copy attached with it.
- The Blockchain required 10 minutes to update itself.
Wallets, Protocols, Digital Signatures
What is a wallet?
A wallet is a string of letters and numbers, for example 17c147926760e5850973303c360h136s22673k554. This is basically an address that will appear in numerous blocks in the Blockchain when the transactions happen. There are no noticeable records of the people who performed the transaction, just the wallet. Each particular wallet address is a public key.
The Blockchain technology involves individual behaviour specifications, and there are many rules that are planned into it. These specifications are known as protocols. The specific protocols implementation fundamentally made Blockchain what it is a peer-to-peer, distributed and protected information database.
To perform any transaction, you required to do two things: a wallet, that is essentially an address, and another one is a private key. The private key is a random numbers’ string, but the private key is not public like an address and it should be kept secret during the transaction.
In this article, I have shared comprehensive information about blockchain technology and how it works. It is expected that in the coming years the blockchain would transform the businesses, IT industry and economies of the word. there are many banks, government agencies are using this technology. Although some people are still doubtful about the security and validity of this technology. So, it can be said that to fully implement this technology at government level, it is important to build trust in people about this technology and clear their doubts about the security of online transaction of money or other property.