Over the past few years, you’ve probably heard the term “blockchain technology” a lot. This is likely because it is often used to talk about cryptocurrencies like Bitcoin. You might even be wondering, “What is blockchain technology?” Blockchain seems to be a platitude, but only in a hypothetical way, since it doesn’t have a clear meaning that the average person can understand. It’s important to know what blockchain technology is, how it works, and why it’s becoming more and more important in the digital world.
As blockchain keeps growing and getting easier to use, it’s up to you to learn about it so you can be ready for the future. If you’re new to blockchain, this is the right place to start learning the basics. In this article, you’ll learn how to answer the question, “What is blockchain technology?” You’ll also learn how blockchain works, why it’s important, and how you can use this field to move up in your career.
What is the technology of blockchain?
Blockchain is a way to store information that makes it hard or impossible to change, hack, or otherwise change the system. A blockchain is a distributed ledger that makes copies of transactions and sends them to all of the computers in the blockchain network. Blockchain technology is a structure that keeps a public ledger of transactions, called a “block,” in a series of databases, called a “chain,” that are connected by peer-to-peer nodes. Most of the time, this kind of storage is called a “digital ledger.”
Every transaction in this ledger is approved by the owner’s digital signature. This proves that the transaction is real and keeps it from being changed. Because of this, the information in the digital ledger is very safe. In simpler terms, the digital ledger is like a Google spreadsheet that is shared among many computers in a network and where the records of purchases are kept. The interesting thing is that anyone can look at the information, but they can’t change it.
Why Does Everyone Like Blockchain?
Let’s say you want to send money from your bank account to family or friends. You would go to your online bank account and use the other person’s account number to send the money to them. Your bank changes the records of the transaction when the transaction is done. It seems easy enough, doesn’t it? Most of us don’t think about a possible problem.
Blockchain is a new technology that has many benefits in a world that is becoming more digital.
It uses a digital signature to make sure that transactions are safe from fraud. Without a specific digital signature, other users can’t change or corrupt the data of one person.
System Without a Center
In the past, transactions needed to be approved by governing bodies like a government or bank. With Blockchain, transactions are done with the agreement of all users, which makes them safer, smoother, and faster.
It can be programmed and can set off a series of actions, events, and payments when the trigger conditions are met. There are different kinds of blockchain.
Blockchains come in four different forms. Here’s what they are:
Private Blockchain Network
Private blockchains work on closed networks and tend to work well for businesses and organisations that are privately owned. Private blockchains let companies change their access and authorization settings, network parameters, and other important security options. A private blockchain network is run by a single authority.
Blockchain networks that are open to the public
The public blockchains that Bitcoin and other cryptocurrencies were based on also helped spread the word about distributed ledger technology (DLT). Public blockchains also help get rid of problems like security flaws and too much power in one place. With DLT, data is spread out over a peer-to-peer network instead of being kept in one place. A consensus algorithm is used to check the authenticity of information. Proof of stake (PoS) and proof of work (PoW) are two common ways to reach a consensus.
Blockchain networks that require permission
Permissioned blockchain networks, which are sometimes called “hybrid blockchains,” are private blockchains that only let people who are allowed to access them do so. Organizations usually set up these kinds of blockchains to get the best of both worlds. It also gives them more control over who can join the network and what transactions they can take part in.
Consortium blockchains are like permissioned blockchains in that they have both public and private parts. However, a consortium blockchain network will be managed by more than one organisation. Even though these kinds of blockchains can be harder to set up at first, they can be safer once they are up and running. Also, consortium blockchains are the best way for multiple organisations to work together.
Encryptions with Hash
Hashing and encryption are used by blockchain technology to keep data safe. The SHA256 algorithm is used most often to keep information safe. The SHA256 algorithm sends the address of the sender (the public key), the address of the receiver, the transaction, and information about his or her private key. The encrypted information is sent all over the world using a method called “hash encryption.” Once the information has been checked, it is added to the blockchain. The SHA256 algorithm makes it nearly impossible to break the hash encryption, which makes it easier for the sender and receiver to prove who they are.