What is blockchain technology and how does it work | Explained step by step

Blockchain: A Revolutionary Technology Explained

In today's modern world, blockchain came out to be a revolutionary technology with a variety of implications. The applications are across a variety of industries. This article will tell you about the principles of blockchain and its impacts on globals ectors.

What is Blockchain?

Definition: Blockchain acts as a digital record that maintains the record of all the transactions that occur across multiple computers. It is not the same as older versions of blockchain. Record maintaining technique like earlier banks were used to record the transactions but they were not transparent. For example, in blockchain everybody has a own copy of record. This ensures security and reliability in data exchanges.

Key Features:

• Firstly, it is decentralized, so the architecture is called decentralization, where no single entity or user or person or organization controls the entire system. This distributed network is collaboratively or collectively maintained by everybody. The verification of the digital records and the enhancing of system security, all of these are done by collective users.

• Now comes the transparency. Every transaction recorded on the blockchain is visible to everybody who are related to that. And that also, in real time, the transparency not only brings trust among users but also facilitates the accountability across all the transactions, making it good for all the applications requiring high level transparency, such as supply chain management.

• Thirdly, it is immutable. What does it mean? Basically, immutable means that cannot be erased or changed by any single person. So, once the data is recorded in a block and added to the blockchain, it becomes virtually unchangeable. The hashing part maintains or prevents the alteration or tampering with existing data. And so, it is very much secured and prevents the fraudulent activities.

How actually Blockchain Works?

Transactions are grouped into blocks, each containing some data, a timestamp, and a hash of the previous block. Have you ever learnt about linked list? If you are from computer science sector, you must have heard this. So, these are also stored in the form of linked list. In the chronological order, forming a continuous chain of blocks, and hence the name is blockchain. The links between the blocks ensure the integrity of the entire chain, as any alteration in one block would invalidate all of the blocks. Consensus mechanism is used to invalidate and add new blocks to the chain. For example, Proof of Work, or POW, where nodes compete to solve complex mathematical puzzles to validate transactions. Or the second one being POS, or Proof of Stake, where validators are chosen based on the amount of cryptocurrency they hold.

Conclusion

By applying the blockchain technology, businesses can unlock new opportunities, or make their operations simple, or enhance security, and ultimately create a one more transparent and efficient future. As the blockchain is evolving, understanding its basics and working principles has become very important. Therefore, read the article very carefully, and comment out the things that you have understood. Goodbye till then.