What is Blockchain Technology?
- Blockchain technology eliminates the need for a trusted party to facilitate digital relationships and forms the backbone of cryptocurrencies.
- Blockchain is a type of ledger technology that stores and records data.
- Blockchain is a term that seems to dominate any conversation about the future of technology, from the power of cryptocurrencies to new forms of cybersecurity. While the applications of the technology may seem endless, few people know exactly what blockchain is.
In the past, transactions were tracked with written records and stored in financial institutions. Traditional records can be audited, but only by those with privileged access. Blockchain has taken these concepts and democratized it by removing the secrecy in the way information – i.e. transaction data – is handled.
In its simplest form, a blockchain is a distributed list of transactions that is constantly updated and revised. Also known as Distributed Ledger Technology (DLT), it can be programmed to record and monitor anything of value on a network spanning multiple sites and assets. This creates a kind of global spider web of interconnected computers.
Although often associated with cryptocurrencies, blockchain technology is not exclusive to the digital asset market. With its unique ability to add and store data, it can perform many other functions in many industries.
1) What does a blockchain look like?
A blockchain can be divided into two components the block and the chain.
A block is a dataset that is chronologically related to other blocks in a virtual chain. You can think of the blockchain as a train of several cars connected online, where each car contains some amount of data. Just like passengers in a real train car, blocks can only hold a certain amount of data before they fill up.
Each block also contains a timestamp, and so it's clear when the data was recorded and stored - something vital for things like transaction or supply chain data where it's important to know exactly when a payment or a package was processed.
2) How many copies are there?
There is no single master copy of a blockchain. Instead, each person running a computer that contributes to the network – also known as a “node” – keeps their own copy of the blockchain and constantly checks with other nodes to make sure everyone has the same record of data. By requiring each individual participant to keep their own copy, this means that there is no single point of failure. This impressive layer of security also means that it is virtually impossible for malicious agents to tamper with data stored on blockchains.
If a group of hackers wanted to manipulate a transaction on a blockchain, they would have to break into the device of every network participant in the world and change all the records to show the same thing.
Unlike a database of financial records maintained by traditional institutions, the blockchain is completely transparent and aims to be distributed, shared across networks, and in many cases completely public. By prioritizing transaction transparency and how information is stored, blockchain can act as a single source of truth.
3) How is data added to a blockchain?
In addition to being transparent about data, blockchain is a secure way to store data. Using Bitcoin as an example, here's how a transaction is added to a new block:
When a bitcoin user sends a transaction, a message is created with the sender's and receiver's public addresses and the amount of the transaction. The sender receives this data, adds its private key to the hash, and then generates a hash of it (converts it to a fixed-length code). This creates a digital signature to verify the intent of the person holding the bitcoin amount. send. to the buyer.
The sender then combines this digital signature with the message and its own public key and broadcasts it over the network. It's kind of like, "Hey guys! I want to send bitcoin to this person.
(Note: For most wallets and other apps, this is all "on start" and users don't have to manage transactions themselves.)
The packed transaction joins a waiting room full of other unconfirmed transactions that want to be added to the blockchain known as a "mempool".
In the case of the Bitcoin network, miners who successfully discover new blocks via proof-of-work then receive a batch of transactions from the mempool (usually depending on which ones have the highest fees), to make sure each sender really owns each transaction. Check. run through the software to make sure the amount of bitcoins they want to send in their wallets, the bundled data (digital signatures, messages and public keys) are legitimate, add them to the new block and finally publish the proposed new block. network so that other miners can verify that everything is correct.
This is similar to the process used in Proof-of-Stake blockchains, but instead of discovering and verifying transactions, users who lock some cryptocurrency – called “stakeers” or “validators” – run the process.
Nodes can perform a variety of tasks. These include keeping a historical record of all transaction data, verifying transactions, and adding new blocks to the blockchain if mining nodes or nodes are verified. Once a transaction has been confirmed and added, information cannot be changed or rewritten. This is why data stored in a blockchain network is called "immutable".
The blockchain simply records every transaction that takes place on its network. For example, the Ethereum blockchain is a record of all ether transactions that have ever occurred. So if an update needs to be made around a previous transaction rather than returning to the original data, a new record is created on the change.
4) Other use cases for blockchain technology
- Blockchain eliminates the need for intermediaries such as banks. The peer-to-peer network eliminates the middleman and ensures that transactions are secure, reduce costs, and are reviewed by everyone.
- Besides being used for finance, blockchain technology has many other functions. Hospitals are integrating blockchain to help track and improve the accuracy of medical record data. Agribusiness uses logistics to monitor the food supply chain. Smart contracts depend on it to keep track of all contracts and status changes. More recently, it has become a way to trade, sell and verify original digital artworks.
- Blockchains are becoming an increasingly important part of how we live, work and interact with our digital information. As with any other revolutionary new technology, there is no single set of standards and the overall effect is yet to be discovered. But there is no doubt that he will stay here.