Everything You Need to Know About Blockchain Technology

What is Blockchain?

Blockchain can be defined as a distributed database or ledger that is shared by the nodes of a computer network. A blockchain is a digital database that stores information electronically. Blockchains are best known for their crucial role in maintaining a secure and decentralized transaction record in cryptocurrency systems like Bitcoin. Blockchain technology has managed to generate trust without the need for a trusted third party and guarantees the fidelity and security of a record of data.

The way data is structured is one of the main differences between a blockchain and a typical database. Information is gathered in blocks, which hold sets of information, in a blockchain. The blockchain is a data chain that is made up of blocks that each have a specific storage capacity and, when filled, are closed and linked to the block that was previously filled. After that newly added block is filled, all new information is compiled into a newly formed block that will also be added to the chain.

How Important is the Blockchain Technology?

Multi-step transactions that need to be verified and traced can now be done more easily thanks to blockchain technology. It can speed up data transfer processing, guarantee safe transactions, and reduce costs. Contract administration and product auditing can both benefit from blockchain technology.

Over 10,000 more blockchain-based cryptocurrency systems are currently in use. However, it has been demonstrated that blockchain can also be used to securely store information about other kinds of transactions.

Business today is dependent on information. The faster and more trustworthy it can be sent, the better. Since it offers instantaneous, decentralized, and completely straightforward data a blockchain network can be used to track everything from orders to transfers to accounts to production.

Elements of The Blockchain

1. Distributed Ledgers

As already mentioned, blockchain is a decentralized public distributed ledger used to record transactions across many computers. A distributed ledger is a database shared by blockchain network users. Bitcoin network users can access and verify transactions, making it less vulnerable to cyberattacks.

2. Node

A device that is connected to a peer-to-peer network is referred to as a node. The node can be defined as a moderator that participates in building the decentralized network.

3. Chain

A chain is a group of blocks connected in a particular order.

4. Miners

Miners are nodes that check each block before allowing anything to be added to the structure of the blockchain.

5. Consensus

In a nutshell, the consensus protocol guarantees that any new block added to the Blockchain will only be the version that all of the Blockchain's nodes agree on. A consensus algorithm, as a result, tries to come to an agreement that everyone in the network can agree on.

Types of Blockchain Networks

1. Public Blockchain Organization

A public blockchain can be utilized to construct a totally open blockchain, like Bitcoin that permits anybody to join and add information to the organization. In a public blockchain, anyone can enter and participate in the core operations of the blockchain network. A public blockchain helps to maintain its self-governing existence by allowing anyone to read, write, and audit the network's ongoing operations.

2. Private Blockchain Networks

A private blockchain is one with permissions. The individuals who have access to the network are subject to a number of restrictions. Because the network is controlled by one or more people, transactions must be done through third parties. In a private blockchain, only the parties involved will be aware of the transactions, and no one else will be able to access them.

3. Federated Blockchain 

A consortium blockchain is a type of blockchain technology in which multiple entities, not just one, control the network. It is more like a private distributed ledger than a private network or a public one. Public and private blockchains are combined in the federated blockchain model.

Blockchain In Industries

1. Banking

Before the establishment of Blockchain technology, sending cash abroad was costly and significantly more troublesome because of the unbearable secret expenses.

But now Blockchain is disrupting the banking system by wiping out the requirement for a broker. By providing a peer-to-peer payment system with the highest level of security and the lowest fees.

2. Voting Systems

The majority of traditional voting systems allow for illegal activities which may result in the elections being rigged. Not to mention that citizens who want to vote have to wait a little bit longer in line and vote for a local authority, which takes a lot of time.

Using Blockchain, voters can cast their votes using a smartphone, where the records are stored in the blockchain securely. And without disclosing their identity in public. The votes are counted with high accuracy by the officials because they know that each ID can only be attributed to one vote.

Written By: Abderrahmane Loudiyi

Edited By: Nidhi Jha