Last few years, blockchain-based technology is a buzzword topic all over the world. Such as cryptocurrencies, NFT, bitcoin, etc.However, blockchain has been used for decades, but it is becoming very popular over the past few years due to cryptocurrency.
At present time, many large corporations, businesses, and venture capitalists are using this technology to make money. They are betting billions of dollars on the “blockchain”.
Even after reading a lot of articles you still don’t understand Blockchain. So, read this article carefully here I will explain, all about Blockchain in the simplest way.
Read this article, What you want to know
- All about Blockchain Technology
- How does blockchain technology work
- Why do we need Blockchain
- Get a Free e-book to master it
Blockchain Technology Explained in Simple Way
Blockchain is a chain of encrypted blocks that stores lots of information. Basically, a block is a collection of data. Each piece of data is added to the blockchain by adding blocks one after the other in a chronological manner.
Let’s try to understand with an example
Let’s imagine a special MS excel sheet or google spreadsheet that can be accessed by every computer in the world and all the computers connected to the internet. Every time the transaction happens, it is automatically recorded onto a row of this excel.
Anyone can access this excel sheet with the help of their mobile or computer devices and connect via the internet.
All the transaction is transparent and no one can change or remove any information from this sheet.
Once a block is added to the blockchain then we can’t change or remove this block. This technology is based on decentralization that allows real-time access and transparency to the public.
Understand More About Blockchain Via Bitcoin
Bitcoin is the first and most famous application of Blockchain. That is totally based on peer-to-peer digital currency for the modern age.
Without taking permission from the government or banks you can send bitcoin to anyone and anywhere.
To securely transfer a bitcoin from one wallet to another one, blockchain technology uses proof of work. Here miner or system verifies this transaction. That’s why there’s no need for any third-party intermediaries.
Once the transaction is done, this transaction has stored in the blockchain.
Key Takeaways About Blockchain Technology
- Blockchain is a collection of databases, all the blocks are store a small amount of information and connect via a chain.
- Blockchain technology is totally based on decentralization that allows full transparency and real-time access to the public.
- No one can change or remove a block of information after adding to the Network.
- Blockchain uses smart contracts to transfer ownership that is highly secured and transparent.
- Because of decentralization and inherent security, entrepreneurs can use this technology in every single sector.
How does Blockchain Technology Work?
So, after understanding what is blockchain, now you need to understand about how blockchain works. Blockchain technology use three major concepts: block, miner, and nodes.
- Blocks contain a particular amount of data that connects to the blockchain network.
- Miners help to create a new block in the network by the process of mining. Miners help to perform every activity in the blockchain network.
- Nodes can be any kind of electronic device that helps to maintain copies of the blockchain and keeps the network functional.
Let’s try to understand the working of Blockchain technology via Bitcoin
In the blockchain network of bitcoin, 1MB blocks exist that contains peer-to-peer transactions. With the help of the inbuilt consensus mechanism, after this transaction is verified by the miners and it is added to the network via block. Each entry in these blocks is highly secured by cryptographic math which makes it immutable.
Blocks contain Features like:
- Each block has a date and time associated with it.
- All the information is transparent in the block.
- Multiple copies are kept at multiple places in each block.
- All the blocks are highly secure and irreversible.
When anybody does a transaction in the bitcoin blockchain, it goes into a pool of unconfirmed transactions called a “mempool”. These transactions are then grouped into a block. After this, the miners solve the computationally difficult math problem to add this block to Bitcoin’s blockchain.
So, in this way, a block is generated in the Network. And Bitcoin’s blockchain is used by millions of users who are running this distributed ledger on their PCs.
Each block contains a piece of information that occurs in the history of bitcoin. Hence, it is difficult for anyone to corrupt it or bring down the system.
Furthermore, each transaction is secured by a strong consensus mechanism.
Bitcoin’s blockchain used a “proof of work method” to do every transaction. In this, hackers need the permission of 51% of the network to reverse the cryptographic math. This means that hackers need to hack 51% of the total number of computers that are running in the blockchain at various locations.
If any person tries to do this, then he needs a high amount of capital, a huge team, and energy.
Why Does Blockchain Matter?
As I mentioned above, Blockchain is highly secured and transparent. No need for a third person to secure a database.
Let’s take an example of a person who lives beside the river. He bought a piece of land, but in a flood, he lost anything like house paper, agreement of the land, identity, etc. Now he has nothing to show the government for claiming his land. Now, this person is at a loss!
Here, blockchain is the solution to this problem. If he adds his identity to the blockchain, then multiple copies of his identity are distributed around the world.
This is one benefit of a blockchain application. Apart from this, blockchain technology helps to protect our ownership, identity, etc. We can see blockchain in different industries like real estate, finance, NFT, currency, etc.
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So, we can say that blockchain technology is a highly growing technology in today’s world. Many entrepreneurs finding new ways to use blockchain technology in different industries.
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