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What is Blockchain?
Blockchain is a technology that refers to a decentralized data storing system. Let me explain the term “decentralized” which is widely used for defining blockchain. Traditional data storing system structures it’s data into tables which is hosted/stored on a computer. It’s a centralized system which can only be accessed, modified or controlled by some authorized people. In these traditional systems unauthorized access can be easily achieved by breaching the security of that particular. Rather than using a central storage, in blockchain data are distributed to a node of computer network.
Transaction process of a Blockchain
Blockchain collects and structures its data into group which is known as “block”. The first block is called a genesis block in a blockchain. When storage capacities of a block is filled and closed, it links to the previous blocks. Thus it forms a chain of data known as the “blockchain”. In blockchain, data held in database are spread out among several network nodes at various locations. So if hackers want to corrupt a blockchain system, they have to change every block in the chain, across all of the distributed versions of the chain.
Key features of a Blockchain
Imagine that a company maintains its own server located in their office building. This server contains a lot of valuable information such as: employee database, financial accounts, inventory and a database containing information of all clients. What will happen if the power goes out, internet connection is disconnected or it burns to the ground? What if a bad guy erases everything and the data is lost or corrupted? Blockchain is the perfect solution in this case. Since the blockchain stores data in distributed nodes, it maintains the integrity of the stored information. No single node in the network can change the information contained in it. If a user tampers with the Bitcoin transaction record, all other nodes will cross-reference each other and easily identify the node with incorrect information.
All transactions in blockchain can be viewed transparently either by having a private node or using blockchain an explorer. Using blockchain explorer you can see information like historical prices, the most recently mined blocks, the mempool size of unconfirmed transactions, and data for the latest transactions. If a bad actor does something on the blockchain, you can track the transaction also. This way the users of blockchains can remain anonymous while preserving transparency.
Blockchain technology achieves decentralized security and confidence in a variety of ways. New blocks in blockchain are always stored linearly and chronologically. Once a block is added to the end of the blockchain, it is extremely difficult to go back and change the content of the block. A majority of the nodes connected to each other have to agree in order to change information stored in a blockchain. Every single transaction request is cross checked against each other. If a single copy is changed and the new copy does not match the existing copies, it will be discarded as invalid. So if a hacker wants to alter a blockchain and steal cryptocurrency from it, he must run and control at least 51% of the nodes in that blockchain.
Cryptocurrency is a digital or virtual currency developed using blockchain technology. Traditional currencies are controlled by central authority system. A user’s data and currency is technically at the discretion of their bank or government. The value of a holder’s currency could be at risk if his bank is hacked, collapsed or he lives in a country with an unstable government. Cryptocurrencies like Bitcoin can solve all these problems with its distributed nature. The numbers of crytocurrency projects are increasing day by day. Bitcoin, Ethereum, Binance Coin, Cardano, Litecoin are some of the common cryptocurrency dominating the market.