You’ve heard about Bitcoin and possibly about other cryptocurrencies such as Ether, Ripple etc. these cryptocurrencies rely on some form of database that is able to track large volumes of transactions and keep them secure. The solution adopted by these cryptocurrencies is the blockchain tech.
The idea of a blockchain tech is still fresh as it is still in the infant-era of digital evolution. As a matter of fact, most of blockchain tech coverage is solely focused on the transitory benefits of the cryptocurrency world. However, blockchain tech is useful that just backing cryptocurrencies, it holds promises for almost every industry especially the financial and marketing industry.
The evolution of blockchain technology is very similar to that of the internet, this underpinning technology has its promises to ignite a new generation of pioneers. With this in mind, it is time to know what is blockchain and the real purpose of its functionality.
If you follow tech news, you would have heard a lot of information about blockchain. But when you heard this word, you might not really know what is Blockchain? How does it work? And how to get more information about this new technology?
Hence, here is a simple guide to help you understand the blockchain tech with the simple explanation of the concept.
What is Blockchain Tech?
In a nutshell “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.”
Blockchain technology relies upon a shared record of transactions across a peer-to-peer network of computers. Every computer in the network has access to this shared record and uses special software to participate in the process. The computers on the network verify transactions in chunks of data called blocks. Once a computer verifies the transactions (typically by solving a complicated math problem), the network adds the block at the end of a chain of other blocks. These blocks stretch back all the way to the earliest transactions in the system in an unbroken chain.
Remember, it’s a long chain of blocks that is continuously growing and you can’t alter the chain going through some points in the past. If anyone tries to go to some point in the past and alter a block, then it will alter all the blocks since then. Since there are many peers of blockchain on a distributed system, we can see if any of the blocks have been altered. So, it will be very harder to alter or break any block in the past. That is why we say, a blockchain is immutable or unchangeable.
How does the Blockchain work?
The very simple theme here is that it works as a system where records could be stored that could be verified by anyone and security is guaranteed. That’s why no one can alter the system by editing because everyone using the system would be watching. Blockchain stores information across the network of personal computers making them not just decentralized but distributed. This means no central authority owns the system, yet everyone can use it.
The people who run the system holds bundles of records submitted by others known as blocks in a chronological chain. The blockchain uses cryptography, which is a form of maths used in solving codes, to ensure that records can’t be altered by anyone. Digital coins like Bitcoin, Ether, Steem etc. use their own blockchain by tracking records of ownership over digital cash so only one person can be the owner at a time and a cash can’t be sent twice.
How blockchain technology keeps data secure
Blockchain poises to make online transactions more secure while eliminating middlemen. Since blockchain is decentralized, no one entity or organization can control it. Whenever a new block is added to the chain, computers verify whether the previous transactions actually occurred. Because each block references the block before it, each transaction made down to the original block is confirmed. The blocks of those who attempt to cheat the system look different from other blocks. Since blockchain requires consensuses among all users, the cheater’s version of the blockchain will be disposed of.
Benefits of Blockchain technology
Blockchain disrupts the complex and time-consuming process of business-to-business transactions with an alternative that’s transparent, verifiable, and tamper-proof. The benefits for today’s businesses include:
Blockchain technology automatically triggers actions, events, and even payments based on preset conditions. Processes that took days (or weeks) are now done in near real-time.
More Automated Processes
Blockchain technology automates data exchange and the processes that depend on it. Eliminate offline or batch reconciliation.
Blockchain technology lowers costs by accelerating transactions and eliminating settlement processes by using a trusted, shared fabric of common information instead of relying on centralized intermediaries or complex reconciliation processes.
Blockchain technology affords near real-time visibility into distributed transactions across your authorized business network. It maintains a shared system of record with a single version of the truth.
Blockchain technology reduces fraud while increasing regulatory compliance with tamper-proof business-critical records. Secure your data by using cryptographically linked blocks so that records cannot be altered or deleted without detection.
From a cruising point, blockchain enhances security and trust in ways that serve in today’s world. It is said to be incorruptible. For example, most banking systems around the world are built on a centralized database that is more vulnerable to cyber-attack. With blockchain, it could eliminate some of the current cyber-crimes being perpetrated today against our financial institutions. With the added security brought by the blockchain, it is a vast improvement over traditional data integration methods.
While blockchain is still relatively a new technology, it’s becoming one of the most useful tech innovations of the 21st century. As mainstream awareness and blockchain adoption increases, ambitious developers and entrepreneurs’ central pivot is to use it to revamp the economic ecosystem. Blockchain technology is only the beginning–it’s still in its early stages of transforming the evolution of an economic system.
If you have any questions about blockchain, don’t hesitate to ask u through the comment box.