What is Blockchain Technology?
BLOCKCHAIN IS MOST CLEARLY DEFINED AS A DECENTRALIZED, DISTRIBUTED LEDGER TECHNOLOGY THAT RECORDS THE PROVENANCE OF A DIGITAL CREDIT.
Blockchain, frequently assigned to as Distributed Ledger Technology (DLT), makes the history of any digital asset unalterable and transparent through the help of decentralization and cryptographic hashing.
A simple comparison for understanding blockchain technology is a Google Doc. When we create a document and share it among a group of people, the document is distributed instead of copied or transferred. This sets up a decentralized distribution chain that gives everyone key to the document at the same time.
BLOCKCHAIN EXPLAINED: A QUICK OVERVIEW
- Digital assets are shared, instead of copied or transferred.
- The asset is decentralize, allowing full real-time access.
- A transparent ledger of changes conserves integrity of the document, which creates trust in the asset.
- Blockchain is an especially encouraging and revolutionary technology .
- It helps reduce risk, stamps out fraud and brings transparency in a scalable way for myriad uses.
How Does Blockchain Work?
“The whole point of using a blockchain is to let people — in particular, people who don’t trust one another — share valuable data in a secure, tamperproof way.”
— MIT Technology Review
Blockchain consists of three important concepts:
What Blockchain is NOT!
- Blockchain is not Bitcoin, instead it is the technology behind Bitcoin.
- Bitcoin is the digital token and blockchain is the ledger to have a control of who owns the digital tokens.
- You cannot have Bitcoin without blockchain, but you can have blockchain without Bitcoin.
How Blockchain Transaction Works?
Step 1) Some person seeks a transaction. The transaction could include cryptocurrency, contracts, records or other information.
Step 2) The requested transaction is broadcasted to a P2P network with the support of nodes.
Step 3) The network of nodes validates the transaction and the user’s status with the support of known algorithms.
Step 4) Once the transaction is complete the new block is join to the current blockchain. In such a way that is permanent and fixed.
Why do we need Blockchain Technology?
Here, are some reasons why Blockchain technology has become so famous:
- Resilience: Blockchains are often cloned architecture. The chain is execute by most nodes in the event of a huge attack against the system.
- Time reduction: In the financial industry, blockchain can play an important role by allowing the quicker settlement of trades. It does not need a tedious process of verification, settlement, and clearance. A single version of agreed-upon data of the share ledger is accessible between all stakeholders.
- Reliability: Blockchain certifies and verifies the identities of the keen parties. This eliminates double records, reducing rates and accelerates transactions.
- Unchangeable transactions: By registering transactions in sequential order. Blockchain certifies the firmness of all operations. When any new block is added to the chain of ledgers , it cannot be removed or modified.
- Fraud prevention: The approaches of shared information and consensus prevent possible losses due to fraud or misuse. In logistics-based industries, blockchain as a monitoring mechanism to cut down costs.
- Security: Attacking a traditional database is the damage of a specific target. With the help of Distributed Ledger Technology, each party has a copy of the original chain, so the system remains operative. Even if a large number of other nodes fall.
- Transparency: Changes to public blockchains are publicly viewable to every individual. This offers greater transparency, and all transactions are immutable.
- Collaboration – Allows parties to transact candidly with each other without the urgency for mediating third parties.
- Decentralized: There are standards guidelines on how every node exchanges the blockchain information. This method makes sure that all transactions are valid, and all valid transactions are added one by one.
Blockchain Technology versions
- Blockchain 1.0: Currency
The application of DLT (distributed ledger technology) led to its first and obvious application: cryptocurrencies. This allows financial transactions established on blockchain technology. It is use in currency and payments. Bitcoin is the most outstanding example .
- Blockchain 2.0: Smart Contracts
The new vital concepts are Smart Contracts, small computer programs that “live” in the blockchain. They are free computer programs that perform automatically. It also checks conditions defined previously like facilitation, verification or enforcement. It is a replacement for classic contracts.
- Blockchain 3.0: DApps:
DApps is an abbreviation of decentralized application. It has their backend code running on a decentralized person to person network. A DApp can have frontend code and user interfaces written in any language. It can make a call to its backend, like a classical Apph.