We all have heard about Cryptocurrency, especially bitcoin cryptocurrency has now become the talk of the town, but do you know how this currency works?
How can you buy things or do investment via cryptocurrency instead of the real currency which are issued by the financial authorities of the countries?
Well, the whole transaction of cryptocurrency is done under an advanced version of Distributed Ledger Technology (DLT) which is Blockchain Technology.
Blockchain was first introduced in 1991 by Stuart Haber and W. Scott Stornetta. But it was used for the first time in 2009 when an anonymous person named Satoshi Nakamoto used blockchain technology to transact bitcoin. And from there, blockchain technology was introduced to common people.
Is Blockchain a Database?
A database is a place where you can save your digital data and use it whenever required. We have seen that the websites we use have a database where all the data of the website is stored like its passwords, backups, etc.
Whereas blockchain is a distributed ledger technology, it is an advanced form of database that has distributed database.
It is used to store the transactions that happened inside it, all the transactions done are stored as a form of block and create a chain of blocks.
Unlike the normal database, where there is a single location server, blockchain technology has a distributed database, which means many computers host it and it is designed for many users.
The collection of information is electronically stored on different computers. The information on the database is saved in a form of a specific table, to make the searching and filtering of data easier.
How does Blockchain work?
In the blockchain, the data is saved in blocks, where the blocks have limited capacity to store information. So whenever a certain block is filled with the data it gets connected with the previous block. This process continues and forms a chain of blocks and that is why we call this technology Blockchain Technology.
The first block in any blockchain is called the Genesis of that blockchain.
Blockchain uses Hash Encryption to make the data safe and secure. A hash is a string of letters and numbers. It’s a deterministic hexadecimal number. Hash Encryption converts the input of letters and numbers into a fixed-length encrypted output.
On every transaction value of the hash is created and it is dependent on both present and previous transactions. If someone changes any of the hash in the chain, then automatically all the hash will get changed and people will get to know that someone has disturbed the blockchain.
What are Nodes in Blockchain Technology?
As we know Blockchain is a type of distributed database, so here all the information is stored on many computers and those computers are called “NODES”. Nodes have a copy of all the transactions held in a blockchain. Nodes check the hash to see whether any transaction takes place or not.
If any transaction occurred then, then the majority of nodes approve the transaction after that it’s been recorded in the blockchain.
Nodes form the infrastructure of the blockchain by Storing, Spreading, and Preserving its data.
Also, there is a device called Pull Node, that has a copy of the history of all the transactions.
What are the Features of Blockchain
- Secure and Safe to use:
Due to the Hash Encryption the data is stored in encrypted form and the identity of every block is unique just like our fingerprint makes it safe and secure. Also, it has a distributed database which is why it is more secure because the details of transactions are not under a single authority. All the people in the network have a copy of the transactions.
- Removes the Third Party:
As there is no third-party authority or middleman, everything is controlled by the public, so there are no fees for transactions.
- Follow the Consensus Rule:
When any transaction occurs in the blockchain, then it is been monitored by nodes and when the majority of nodes allow or support the transaction, it is recorded in the block.
- Blockchain Smart Contract:
Smart Contract works on code, which when introduced in blockchain, then the transaction occurs on its own.
What are the uses of Blockchain Technology?
Most of us think that Blockchain can only be used for Cryptocurrency but there are several areas where we can use this amazing technology to make our work easier.
- Between Financial Banks and Institutions for the exchange of funds.
- In Healthcare for storing the medical records of all the patients
- In Supply Chain Management
- In Voting System
- In Real Estate for Notary
Conclusion
Blockchain is a distributed ledger technology and we can use it for making our work easier and more secure. I think it’s an amazing technology and the concept of cryptocurrency is also on boom these days.
What do you think about using Blockchain technology?