Internet of Value = Blockchain
You might have heard about the term ‘BLOCKCHAIN.’ So, just to give you an insight into what Blockchain is.
A Blockchain is a distributed database in which the storage devices for the database are not all connected to a conventional processor. It provides a growing list of ordered records, called blocks. Each block includes a timestamp and an element to a previous block, or we can add that each of these blocks of data, i.e., block is protected and attached using cryptographic principles, i.e., chain. That is how the term ‘Blockchain’ derived!
Are you confused?
Well, in simpler words, Blockchain is a series of permanent records or bundles of data that is managed by the group of standard computers. Blockchain technology also braces digital currency, which includes Bitcoin, Litecoin, etc. For them, this tech allows digital information to be distributed only, but not copied.
In this guide, we are going to explain to you what the blockchain technology is, How does Blockchain work, and what its properties are what make it so unique.
The thought of Blockchains was introduced by Satoshi Nakamoto in 2008, and later carried out in 2009 for the first time as part of digital bitcoin currency; the Blockchain serves as the social ledger for all bitcoin transactions.
The Blockchain network has no paramount authority. Since it is a divided and immutable ledger, the information in it is open for the public and everyone to see. Hence, everything that is built on the Blockchain is by its particular nature transparent, and people involved are liable for their activities.
Users can simply edit the parts of the Blockchain that they “own” by acquiring the private keys needed to address the file. Cryptography ensures that people’s copy of the distributed Blockchain is placed in synch.
How does Blockchain work?
A Blockchain system consists of two copies of a record, activities, and blocks. Transactions are commonly the actions carried out in a specific period, and these are kept together in a block.
On the internet, one can distribute information, and later, others can approach it anywhere in the world. A Blockchain allows one to send value anywhere in the world where the blockchain file can be accessed. But you must have a separate, cryptographically created key to assemble only the blocks you “own.”
Taking bitcoin examples, keys are needed to transfer blocks, which consist of units of currency that have financial means. This holds the role of reading the transfer, which is generally carried out by banks.
The Blockchain is supported by a peer-to-peer network (Will discuss it further). The network is a compilation of nodes that are linked to one another. Nodes are individual computers which hold in input and produces a function on them and turns an output.
Let’s see an example of Wikipedia.
With a Blockchain, many people can create entries into a record of information, and the society of customs can deal with how the recording of data is modified and updated. Likewise, Wikipedia entries are not the output of a single writer. No individual dominates the information.
Whenever a user addresses the Wikipedia page, they will have the revised version of the ‘master copy’ of the Wikipedia page. Control of the database remains in the hand of Wikipedia administrators allowing for access and agreements to be supported.
Wikipedia’s ‘master copy’ is published on a server, and all users have the current version. In the process of a Blockchain, every node in the system is coming to the same conviction, each renewing the record individually in place of being a master copy.
We are all now needed to distributing information through a decentralized online platform, i.e. internet. But when it appears to transfer value – e.g., money, ownership rights, intellectual property, etc. – we are generally forced to fall back on traditional, centralized institutions or systems like banks or government offices.
Even online payment methods that have come into existence since the birth of the internet – PayPal being the most obvious example – usually require integration with a bank account or credit card to be effective. Blockchain technology allows the pleasing possibility of disposing of this “middleman.”
The advantage of Blockchain
- It is not just controlled by a single entity. Hence it is decentralized.
- The data is cryptographically stored in blocks
- The Blockchain is permanent, so no one can tinker with the data that is inside the Blockchain blocks.
- The Blockchain is transparent and clear, so one can record the data if they want.
Is Blockchain Secure?
Due to its advanced cryptographic protection policies, Blockchain offers a much more stable experience than conventional banking.
The case that the automation is decentralized, and cannot be retroactively altered or edited makes it optimal for financial activities and the hiding of valuable information.
Blockchain also improves from being ready to secure the privacy of the user – however, this has unfortunately made it increasingly prominent as the payment method of preference for cybercriminals, as a Bitcoin network node, doesn’t have to disclose the identification of the individual carrying out or making payments.
Blockchain also provides the possibility of establishing a fraud-proof system for transacting exchanges. This, accordingly, indicates its tremendous potential for service outside of the digital currency sphere, helping attract interest not just among conventional financial institutions, but in sections as varied as construction, food production, and even many more.
Interesting in building your blockchain? Check out this hands-on tutorial.