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Blockchain and Blockchain Technology

BitForex Editor
Aug 24, 2020

What is Blockchain

Blockchain is undeniably one of the greatest inventions of man, those who are familiar with cryptocurrency may most likely not be taken aback on hearing the word “blockchain,” especially as it is most familiar with bitcoin based on the fact that it is the record-keeping technology behind its network. most people who try to look up the term blockchain are usually faced with a definition that difficult to understand like for example, “blockchain is a decentralized, distributed, public ledger.” However, the concept of Blockchain is one that is easy to understand. So, the first question here is, what is Blockchain? Blockchain is an increasing list of records known as blocks that are linked with the aid of cryptography, and each block has a cryptographic hash of the previous block. Put, it is a series of immutable records of data managed by a cluster of computers and does not belong to any single person. Blockchain refers to digital information.

Why do we call it the Blockchain

A block is a record of a new transaction, and a block is added to the chain the moment it is complete. For people who own Bitcoins, they are provided with a private password to an address on their chain, which is a record of ownership is. A blockchain defeats the purpose of a middle man as you don’t need a bank in other to verify money transfer or take a cut of the transaction.

How Does Blockchain Work

A block is added to the Blockchain when it stores new data. Blockchain, as the name implies, comprises numerous blocks that are strung together. Four things need to happen for a block to be added to the Blockchain which are;

A transaction

This is one of the four things that must happen for a block to be added to the Blockchain, and it simply entails that a transaction must take place. Let’s use the example of an impulsive online purchase. After hurriedly clicking through numerous checkout prompt, you then decide to go against your better judgment and proceed to make a purchase. As earlier stated, in more than one case, a block will pile together multiple potential transactions; your online purchase will likely be packaged in the block with that of other user’s transaction information as well.

Verification of transaction

once the purchase has been made, your transaction must be verified. This is where Blockchain comes in as it does the job of vetting new data entries is left in the hands of a network of computers. Once your purchase has been made online, the network of computers immediately proceeds to confirm the details of the purchase, time of purchase, and the cost of the purchase as well.

Storing of transaction in a block

Your transaction gets the necessary approval after it has been accurately verified. The cost of the transaction, digital signature as well as that of the online purchase site are all stored in a block. At this point, the transaction is most likely to join other multiple transactions.

Giving the block a hash

When all the blocks transactions have duly been verified, it instantly gives an easy to identify, unique code which is known as a hash. The block as well is given the hash of the most recent block, which has just been added to the Blockchain. The block can instantly be added to the Blockchain once it has been hashed.

A new block becomes publicly available for anyone to see once it has been added to the Blockchain

The Concept of Blockchain Technology

What is Blockchain technology? It is used to refer to the trustless, transparent, publicly accessible ledger that provides us with the opportunity to securely and safely transfer the ownership of units of value with the aid of a public key encryption as well as proof of work methods. The technology adopts the use of a decentralized system to maintain the network; this means that it is not controlled by any government, corporation, or bank. It should be noted that the network becomes more decentralized and secure the larger the network grows. Due to its vast potential, blockchain technology has not only limited its usage to bitcoin as it has successfully gained the attention of numerous industries ranging from nonprofits organizations, charities, financial services, e-commerce, amongst others. Though most notably, Bitcoin, as well as other cryptocurrencies, are one of the most prominent examples of blockchain usage; however, DLT, is exploring the different ways where it could be adopted including business transactions, management of asset and many more.

Pillars of Blockchain Technology

The block fast rise to prominence is attributed to three main pillars which are: Decentralization, Transparency, and Immutability.

Decentralization

Before the advent of Bitcoin and BitTorrent, we were all about centralized services, which was a system adopted by banks where you had to go through the bank before you can pay someone. Even though centralized systems have benefitted us for a long time, they, however, had some vulnerabilities like insecurity due to hacker’s influence, possible loss of information, data corruption, among others. With the aid of a decentralized system, no single entity is in charge of all the information as everyone in the network owns the information. Transactions are made easier as you don’t also need the presence of a third party, plus you don’t need to go through the bank before you can send money to anyone.

Transparency

The concept of transparency in this aspect should not be misunderstood as with bitcoin technology, a person’s identity is hidden with the use of complex cryptography, and they are only represented by their public address. It secures a person’s identity but still allows you to see all transactions done by their public address. This has given a new meaning to transparency, and such as this had not been seen within a financial system.

Immutability

Immutability, as related to Blockchain, means that anything that goes into the Blockchain cannot be tampered with. The cryptographic hash function provides the Blockchain with this advantage. A cryptographic hash function possesses some specific properties which make it secure. With this, your transaction is safe from the hands of hackers and others who steal data.

The future of blockchain technology is quite bright, and it is possible that someday it will be not only used for currency and transactions but other beneficial purposes as well.

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