What is Blockchain Technology and how does it work?
Blockchain technology backs up Bitcoin and other cryptocurrencies to this day, but there’s been a recent groundswell of interest from a variety of industries in making distributed ledger technology work, especially in business. Here’s a primer on what blockchain technology is, how it works, and where it is showing the most promise in business.
What is a blockchain?
Blockchain technology is an invention of a genius named Satoshi Nakamoto. Blockchain is the structured data that helps inaccurate presentations of a financial ledger entry or a record of the transaction. To ensure the authenticity of the transaction, it is being signed digitally which cannot be tampered with under any conditions.
This makes the ledger and all the transactions to be of high integrity. Blockchain technology serves as the backbone of the internet by aiding in distributing digital information without copying it. It is the incorruptible digital ledger of economic transactions which is useful and effective in recording the financial transactions and also giving value to everything virtually.
The features of Blockchain Technology that make it even more demanding is as follows:
- It has increased the capacity of networking. Thousands of computers are working together which has now made blockchain more powerful.
- It offers faster and easy settlement when compared to traditional banking systems where settlement takes days to process. Blockchain ensures to settle the money transfers quite easily without taking much time.
- Blockchain tends to have and offer better security as there is nearly no chances network shut down. Blockchains have high security by many companies that are operating on nodes and are confirming transactions on the networks.
- It offers with Immutable ledger. It does not require any third party to keep the information accurate which avoids the chances of corruption of the centralized data.
How does blockchain work?
On the arrival of some new transaction or requirements of edit in the existing transactions, some algorithms are supposed to be executed by the majority of the nodes within blockchain implementation and that helps identify, evaluate, and verify the history of the individual blockchain block.
All this then leads to confirm if the history and the signature is a valid post in which a new transaction gets accepted into the ledger further adding a new block to the chain of transactions. There are chances of denial of the transactions if the majority of the nodes fail to concede to the addition or modification of the ledger entry.
Blockchain runs effectively as a distributed ledger with the help of a distributed consensus model. All this is being done without the help of any central, unifying authority to identify the valid transactions.
Blockchain has been developed and configured in such a way that enables it to work in several ways with the help of different mechanisms to achieve consensus on transactions. This also helps in defining the known participants in the chain excluding the rest.
The biggest and most demanding example of blockchain technology is Bitcoin. Bitcoin employs an anonymous public ledger in which anyone can easily participate.
Evolution of Blockchain
Blockchain was conceptualized by a genius named Satoshi Nakamoto in the year 2008. It was introduced and implemented in the market in the year 2009. The core component of blockchain was bitcoin. Bitcoin became the first digital currency and it served in solving the double-spending problem.
August 2014 was the year when the bitcoin blockchain file size reached 20 GB. The size kept on growing taking it to 30 GB in January 2015. The growth did not and January 2017 witnessed the size of 100 GB.
The major coins working under Blockchain are as follows: