Blockchain – What Is It & How It Works

What is Blockchain Technology? The blockchain is a growing list of records, which are also called blocks, linked together using cryptography. Blockchains are popular because they can be read by the public and are also used by cryptocurrencies.

Blockchain - What Is It & How It Works

Blockchain technology is the biggest buzzword in the tech space right now. But what is blockchain technology? And why is everyone talking about it?

According to Don & Alex Tapscott, the authors of Blockchain Revolution (2016), “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

The New Internet

Blockchain technology has become an ingenious invention in recent times and the brainchild of a person or group of people known by the pseudonym Satoshi Nakamoto. But since then, the blockchain technology has evolved into something better and greater. Also, the main question everyone wants to know is: What is blockchain?

Blockchain allows digital information to be distributed but not copied. In so doing, blockchain technology has created a new type of internet. Even though blockchain technology was created for digital currency like Bitcoin, the Tech industries have now found other potential uses for the technology

Bitcoin, which is the brainchild of blockchain technology, has been referred to as “digital gold,” and for a good reason. The blockchains also create other types of digital value. And just like the internet, you don’t need to know how blockchain technology works to use it.

How does it work?

Blockchain technology is decentralized. This means that it is not controlled by the central authority. Using Bitcoin as a focus, while our traditional currencies are issued via the central banks, Bitcoin has no central bank or authority. Instead, the Bitcoin blockchain is maintained by a network of people called miners.

These “miners,” or “nodes” on the network, are a network of people who are running a purpose-built computer competing to solve the complex mathematical problems required for a transaction to go through.

For example, if a lot of people are making lots of Bitcoin transactions, each transaction starts with a wallet, which has a “private key.” This begins a digital signature and provides mathematical proof that the transaction has come from the owner of the wallet.

Imagine thousands or millions of these transactions taking place across the world. The individual transactions are grouped into a block and organized by strict cryptographic rules. The block is then sent out to the Bitcoin network, which is made up of people running high-powered computers. These high-powered computers will compete to validate and verify the transactions by trying to solve complex mathematical puzzles.

The winner who solves it first receives an award in Bitcoin.

The validated block is then added to previous blocks, which creates a chain of blocks called a blockchain.

How is the blockchain tamper-proof?

Since we now have an idea of what blockchain technology is, we will look at one of its advantages.

One of the main advantages of blockchain technology is that it can’t be tampered with. Each block of a transaction is added onto the chain of existing transactions which carries a hard, cryptographic reference to the previous block.

Part of solving the transaction puzzle involves working out a random number called the “nonce.” The nonce combines with the other available data like the transaction size and creates a digital fingerprint which is called a hash. This hash is encrypted, which makes it secure and tamper-proof.

Every digital fingerprint is unique and has to meet certain cryptographic conditions. Once this condition is met, a block is completed and added to other chains of blocks. To tamper with this, it means that each earlier block which is over half a million would require the cryptographic puzzles to be re-mined, which is not possible.

Why is blockchain popular?

If you intend to transfer money to your friends or family, the very fast and easiest way to do so is to log on to your bank app or site to transfer this money to the person with their account number. That sounds very easy and reliable, right?
Yes! But here is the thing that most of us tend to overlook.

This type of transaction is not safe and can be tampered with. This is one of the reasons the Blockchain method of exchange was invented or rather created. Technology-wise, this is a digital means of transaction that is here to stay for a long while. Going further on why blockchain has gained so much traction and attention in recent times. Keeping records of bank data and transactions is a crucial part of business.

Most times, this information is managed in the house or goes through a third party like bankers, brokers, or even lawyers as the process demands. This process increases time and cost during procession. Luckily, using blockchain will save you from all of these processes. In addition, it also makes the process a lot faster and saves you time and money.

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