In recent times, Blockchain has become quite popular among the top organizations. The main reason is it is very secure and safe to use. It is a digital ledger of duplicated transactions distributed across the entire network of computer systems on the blockchain.
However, many people have little knowledge about blockchain. But you don’t need to worry. Here in this article, we will be discussing what blockchain technology is and how it works?
What Does Blockchain Technology Mean?
A blockchain is a type of software that allows a network of computers to connect directly without involving any middlemen. What it does is to establish a distributed or decentralized network of computers through which values can be sent instantly, exchanged instantly, or stored securely and at a lower cost.
Key Features Of Blockchain
Blockchain works on three important things that the internet cannot fix. These are –
1. Value: Blockchain helps to create value on digital assets. This value is controlled by the owner only.
2. Trust: Blockchain helps to track ownership, spending, and records securing permanently. It helps to access and trace the data publicly.
3. Reliability: Blockchain helps to remove the single point of failure.
Want to know How the recovery system works? then read another article about – Bitcoin & Cryptocurrency Scams – Get Your Money Back!
Blockchain technology was first introduced in 1991. Stuart Haber and W. Scott Stornetta are two Research scientists who introduced a system that used a chain of blocks secured by cryptography to store time-stamped documents.
A block can successfully store a series of data records to connect to the next. This way, the latest one can contain a history of the entire block.
Versions Of Blockchain
1. Blockchain Version 1.0: This was first introduced by Hal Finney in the year 2005 to create money by solving computer puzzles
2. Blockchain 2.0: Smart Contracts: These computer programs can automatically check facilitation, verification, or enforcement conditions.
3. Blockchain 3.0: DApps: These are decentralized applications based on blockchain that decentralized applications based on blockchain.
Kinds of Blockchains
Blockchain applications contain public, private, and hybrid types.
- Public Blockchain
It doesn’t have the central authority controlling the operation. Governance is participated by all the users. Anyone can [participate in this network because of location and nationality]
- Private Blockchain
These are permissioned networks that private organizations run. The organization acts as means of centralization to limit the participant based on given criteria.
Blockchain- How Does It Work?
Blockchain technology; A full copy of a node is used to gain access to it. Anyone can run a blockchain by downloading it and syncing it to the network. Although, it is quite possible to transact without having a full copy.
Blockchain can be accessed using custom decentralized applications. It makes a platform where users and companies can build their software and extend it as they like, given that it is open-source.
Blockchain Nodes – What is it important?
The main goal of blockchain is to establish a decentralized network free of middlemen, also known as a single point of failure, because a centralized network would fail if there is a problem with the central storage or owner.
The creation of distributed digital ledgers is possible through blockchain stored in copies across multiple computers run by different users.
How Bitcoin Secures Data And Information?
Blockchain uses cryptography which includes public and private key encryption and decryption computer algorithms to secure user data. Encryption securely transmitted raw data over the network such as the internet or on blockchain network or in save mode to be converted to an unreadable format that makes no sense to third-party readers.
That is why it is safe and private to transact and exchange information on a blockchain.
Blockchain And Their Building Blocks
Consensus Algorithm of Blockchain
A consensus algorithm is the set of rules of the house on how the blockchain is governed. It also ensures how users formulate and agree on the rules and transactions.
Blockchain consensus algorithms grant any user to propose changes to the network and vote on these proposals. Governance is an important factor for a blockchain because it determines how decentralized or centralized the network is.
Hashing Creation Of Blocks and Blockchain
When transactions are sent to the network, each has to be completed within a time. Transactions that are sent are combined into a block. To transform the transactions into a secure block, Cryptographic hashing is employed.
A hash function is used to transform an input string of any size into a fixed-length string output (called the hash) such as 32-bit or 64-bit or 128-bit or 256-bit, depending on which hash function is used.
How Does Hashing Work?
Hashing follows some specific function or algorithm to map object data to some expected integer value. This so-called hash code (or hash) is used to narrow down our search when looking for the item on the map.
How Does A Block Built-in Blockchain?
By hashing the transactions sent in the network by participants, a new block in the chain is formed. The Nonce (Number Used Once) allows generating a cryptographic hash that meets a certain criterion to be valid.
A nonce is a random number that can be changed manually as many times by way of guesswork such that when it is fed into the algorithm or hash function together with the rest of the block data.
Difficulty in Creating A Block
The difficulty of finding a block is already coded into the blockchain technology but at the same time connected to the four leading zeros in the hash output. Here the difficulty means finding a hash output that is smaller or greater than the target; say, at least four leading zeros.
Blockchain has opened a new possibility for a distributed ledger shared across networked devices. Through this network, you can share files and values such as distributed ledger that can be shared across networked devices.
It provides a reduced interruption, and there is no single point of failure. There is high reliability in the network. Moreover, Due to cryptography, all assets are secured with high security.