Blockchain is a well-embraced technology in the world currently. Though the name sounds very complicated, the concept of this technology is straightforward. Put simply, a blockchain is a database, i.e., a collection of information stored in a computer system electronically.
All the information in a database is in a table format, allowing easier searching and filtering of specific details. One significant advantage of a database is that it stores a significantly large amount of data, which users can easily access and manipulate easily and quickly.
What is Blockchain?
Blockchain is a system of recording information or data is a form that is impossible to alter, hack or manipulate the system. Typically, it makes digital asset history transparent and unalterable, thanks to the decentralization and cryptographic hashing- cryptographic signature known as a hash. So, this digital ledger houses transactions duplicated and distributed across the entire network of systems on that blockchain.
There are blocks containing transactions – when a new transaction occurs, its record is added to each participant’s ledger. Note that when a transaction occurs, it is distributed rather than being copied or transferred. This results in a decentralized distribution chain giving everyone access to the document at the same time. This is a decentralized database system managed by multiple participants; hence Distributed Ledger Technology (DLT).
With a blockchain, no one is locked out; all changes to the block are recorded in real-time, making changes transparent. Among the significant benefits of blockchain technology is that it helps minimize risk, eliminates fraud, and injects transparency in several uses.
Distributed Ledger Technology: What Are the Feature?
Here are the key features of a Distributed Ledger Technology:
- Programmable: feature smart contracts
- Secure – transactions are individually encrypted
- Anonymous – participants identity is either pseudonymous or anonymous
- Unanimous – all participants agree to the validity of each record
- Distributed – a copy of the ledger is sent to each network participants
- Immutable – validated records are irreversible and unchangeable
- Time-stamped – a block features a transaction timestamp
How Does Blockchain Work?
There are three main concepts in blockchains – blocks, miners, and nodes.
In one chain, you’ll get several blocks. All blocks have pretty similar characteristics:
- Nonce – a 32-bit whole number randomly spawned when a block is created. It creates the block header has.
- Hash – a 256-bit number that is extremely small and is wedded to the nonce.
After creating a block in the chain, the nonce creates a cryptographic hash. This data is tied to the nonce and hash forever unless mined. It is also signed.
Through a process of mining, miners generate new blocks in a chain. But mining requires special software because it is not easy. Although each block develops a special nonce and hash, it also references the previous blocks in the chain. There are approximately 4 billion possible nonce-hash combinations to mine before finding the right one.
If you have to change a block, you must re-mine the block with the change and every other block coming after it. After successful mining, all the nodes within the network accept the change, and the miner gets a financial reward.
In blockchain technology, the chain is distributed via nodes connected to the chain – this is decentralization. A node is an electronic device capable of maintaining copies of the blockchain while keeping the network functioning.
Each node features a unique copy of the blockchain. Still, all newly mined blocks must be algorithmically approved by the network for the chain to be updated, trusted, and verified. You can quickly check each action. Remember, a unique alphanumeric identification number is assigned to each participant to show their transaction.