A Blockchain is a system in which transaction record for the bitcoin and another cryptocurrency is maintained while ensuring security, transparency, and decentralization and which are not controlled by any authority. Blockchain was invented by a person (or a group of people) in 2008 to maintain transaction ledger of cryptocurrency bitcoin for the public. The identity of the inventor(s) is unknown but it was created by the name Satoshi Nakamoto.
What is Blockchain Technology
In simple words, blockchain can be defined as a database that contains a transactional record with security without the involvement of any third party like financial organizations. The record is visible to all users but the transaction record does not include any personal information. Once information is stored in it that cannot be changed by the owner.
It records information in the form of a unique “digital signature” instead of an actual name. These digital signature guarantees that the content has not been altered by anyone in transit.
We can also say that the data is stored digitally in the form of the blocks which is immediately available for all the participants of transaction which eliminates the chance of fraud but the content of the transaction do not involve any personal information.
Let’s understand by example. Consider you had purchased a thing online and know you have to make a payment, you will generally pay via bank or other financial organization or you will transfer by using an application like Paytm or Google pay. The similarity in these options is that each one involves a third party which also charge fees to transfer fund electronically. In addition to that you cannot ensure security a hacker may steal your money by disrupting the network. For which you have to suffer. But in a blockchain there is no extra fee is charged and the fund is transferred directly by you and the database is not limited to you it is decentralized immediately and is public. Since the information stored not stored in one place it minimizes the risk of hackers.
Blockchain Technology Application
How does it work? Blockchain, as the name, suggest that numbers of blocks are linked together. Whenever the information is stored in a block it is added to the blockchain. Each block is linked using a cryptographic hash function which enables security.
What should happen to add information in a blockchain? These things must take place.
- A transaction must happen
- Verification of the transaction
- The transaction must be recorded in the block
- Block must have identifying code that is a hash
Whenever the transaction takes place on the blockchain after making any purchase it needs to be verified. Some nodes validate the transactions. These nodes use the proof-of-work concept, this confirms the transaction and adds a new block in the chain. The nodes are called miners. After the transaction is verified it needs to be stored in a block it includes the digital signature of the customer, a digital signature of the merchant, and the amount of transaction in dollars. When the transaction was verified it must have given a unique identification code known as a hash. The transaction will occur after the hash is correct. Hash is the function that converts the input information into a code of fixed length.
These hash eliminate the risk of fraud because if the hacker tries to disrupt the network and change the information the block hash will also get changed. This breaking of the network will be detected as it will not match the original hash. This will be available to all the users and can easily be detected.
In simple terms, we can say,
- A block is a kind of a spreadsheet containing information about the transaction.
- Nodes verify the transaction
- The nodes use the PoW concept.
- They ensure the information is correct.
- Each transaction has a hash attached.
- Hash is also connected to the previous transaction.
- A small change in the hash will form a new hash which does not match the original one
- These blocks are linked to each other thus called a blockchain.
- The information database is stored ensuring security, transparency, and public.
- Everyone has a copy of the blockchain after the new block is added.
- The blockchain gets updated every 10 minutes.
Blockchain technology has gained popularity in a short period. Many of the industries and individuals had adopted it and many are still thinking about it. Soon this technology will be accepted by the world, and it will change the traditional system.
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