Blockchain is derived from the list of records and these records are also called blocks. These blocks are linked together through cryptography. Each block contains a cryptographic hash of previous block a timestamp and transaction data. It is not possible to modify the data of Blockchain. It is defined as an open and distributed ledger that records the transactions of two parties efficiently and in a permanent and verifiable way.
This new technology creates a backbone for internet and financial transactions without the banking system become possible through Blockchain technology. Digital currency like Bitcoin is based on Blockchain and there are other potential uses of Blockchain as well.
Here we will focus on the technology of Blockchain and also discuss the properties of Blockchain that make the technology unique.
WHAT IS BLOCKCHAIN TECHNOLOGY
It is a time-stamped series of an immutable record of data managed by many computers; these data are secured and bound to each other through cryptography. Blockchain has no central authority and it is a shared and immutable ledger open to everyone. The best thing about Blockchain is that everyone is responsible for its action, which means it is very transparent.
So there is no transactional cost for the transfer of data from one party to another party, ensure safe and easy transfer. When a part wants to do transactions then first it initiates the process by creating a block and this block is verified by millions of computers across the world internet and then added to the chain which automatically stored across the net.
There is no transaction cost of blockchain but it is a clever way of transferring files or information from one place to another in a very safe way. First, you try to send information or data then blockchain initiates a process to create a block and then this block is verified by millions of computers across the net. The verified block is then added to the chain and is saved across the net, now this block has a unique record with history. So if someone wants to falsify the record then it means it will go to falsify the records of the whole chain distributed across the millions of computers which is almost impossible. Bitcoin uses this scenario for transaction purposes. This technology is used for many other ways like the railway tickets system is handled through blockchain technology.
How Block Chain Work
The information or data present on the blockchain is shared; it means it can be accessed from anywhere and by everyone. The data in the blockchain is not present in a central database but is distributed across numerous databases; it means it is very difficult for a hacker to make changes to it.
There are some reasons for the success of blockchain technology:
1. It is decentralized, it is not owned by a single entity.
2. The data is stored through cryptographically.
3. It is immutable, so no one can make changes to it.
4. Anyone can track the data so it is so transparent. Properties of Block Chain
There are three distinguished properties of Block Chain which make it gain widespread acclaims, are given below:
In the beginning, it was the only the concept of a centralized database, which means all the data was stored in a single entity and you had to access this single database to fetch data. We consider the example of a banking system which is based on a centralized concept, which has all your money and when you have to pay someone then you have to go through a bank to make any payment.
The traditional client-server is a typical example of centralized data services. When you search anything in Google then it brings back the relevant information you required.
So we take so many benefits of the centralized type of services since many but here it has some drawbacks as well:
1. All the data is stored in a single entity and it becomes an easy spot for hackers.
2. If the centralized system is shut down due to some failure then at the time you cannot access the data.
3. If the data is corrupted then the recovery is difficult.
4. If you want to upgrade the software then it will halt the whole system.
In a decentralized system, the data is shared across the net. When you want to interact with your friends directly and here you need no third party for interaction. So this is the principle behind Bitcoin because the only owner of your data or charge of Bitcoin and you can send it to anyone without including bank.
There is some confusion about the transparency of blockchain technology. Here a person is identified by his public address, so the identity of a person is secure and no such transparency is seen before in financial transactions. It ensures some accountability required by any big organization.
In the context of blockchain when any information or data is entered into blockchain it cannot be tampered with. So many embezzlement cases can be trapped through block chain technology. This property of the blockchain can be achieved through a cryptographic hash function. Hashing algorithms are used to take input of any length and give an output of the same length. So in the transaction of cryptocurrencies, the transactions are taken as input and after hashing, the fixed length of the output is produced.