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What is Blockchain?

Published on
June 22, 2022
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What is Blockchain?

Many have wondered what Blockchain is all about, the terms used in the tech space may sound a little complex, but it's no rocket science. Blockchain is a virtual public ledger used to keep records of transactions across many computer systems. It is best known for its role in cryptocurrency.

We can refer to Blockchain as a distributed, decentralized database that collects and records transactions in structures called blocks. Each block has a specific storage capacity which, when filled, can be linked to other blocks, thus creating a chain of information (data) which is known as a blockchain. The blocks connect through cryptography.

Each block comprises the previous block's cryptographic signature (hash), the transaction data (represented as the Merkle tree), and a timestamp. The purpose of the timestamp is to show that the data for transactions existed when a block was created.

The decentralized database, managed by more than one participant, is a Distributed Ledger Technology (DLT). Since the blocks in the Blockchain are secured via cryptography, the DLT transactions are recorded with a fixed cryptographic signature, hash, to assure the integrity of the data contained in each block.

How Does Blockchain Work?

Blockchain allows virtual information to be recorded and distributed without being edited. It also serves as the basis for irreversible ledgers, which cannot be changed, erased, or destroyed.

Blockchain allows data held in its database to be distributed among various network nodes at different locations. This helps to ensure the integrity of the data stored, thus making the Blockchain is a transparent, decentralized network.

For the Bitcoin blockchain, the transactions stored are encrypted using cryptography. It means only the transaction owner can record and decide to reveal its identity.

Types Of Blockchains

Presently, there are four types of Blockchain. The most common among these are

1. Private Blockchain

The private Blockchain, also known as the Permissioned Blockchain, uses access control to approve those who can access the network.

It guards against wrong participants in blockchain networks by providing restricted access to validators and participants.

2. Public Blockchain

As opposed to private Blockchain, public Blockchain is permissionless. There is no restricted access to those that can be participants or validators in the network. As long as you have access to an internet connection, you can send transactions and become a validator in this Blockchain.

The Bitcoin and Ethereum blockchain are among the largest known public blockchains.

Other types of blockchains are the hybrid Blockchain and the consortium blockchain.

How Secure Is Blockchain?

The technology behind the Blockchain affects decentralized security in the network. When a network is created, it is stored in a linear and arranged form, making it difficult to alter or edit the contents.

This is possible because each block has its cryptographic signature, hash, as well as the hash of the preceding block. The cryptographic signature is created using a mathematical function to change virtual information into a numerical and alphabetical string.

What Is Next for Blockchain?

Blockchain has made numerous impacts on investments with the practical application of blockchain technology. Investors of cryptocurrency have identified the use of Blockchain in ensuring transactions are secure, efficient, very accurate, and also cheap.

It has also successfully made a name for itself in Bitcoin and cryptocurrency as a whole, as many tech innovators have made moves to adopt blockchain technology.

There is no doubt that many companies will soon catch on to blockchain technology; it's just a matter of time.