The Basics Of Blockchain

By Author: George Philip
Total Articles: 5
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Blockchain may seem like a cumbersome concept, but at its core it is a system of data storage and management. The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. Essentially, a type of database, blockchain is the technological backbone on which cryptocurrency is developed.

What exactly is blockchain?

Blockchain is a shared, unchangeable ledger that facilitates the process of recording transactions and tracking assets in a business network. Assets can be both: tangible, such as a house, a car or land, or intangible in nature, such as intellectual property, patents, and even cryptocurrency. Anything that has a value associated with it can be tracked and traded on a blockchain network, making it secure and inexpensive.

How is data stored on a blockchain?

A blockchain structures its data into chunks that are chained together. Information is collected together in groups, also known as blocks, which hold sets of information. Blocks have certain storage capacities, and when filled, are chained onto the previously filled block. This forms a chain of data ...
... known as the “blockchain.”

These blockchains in a decentralized network are a part of an irreversible timeline. When a block is filled, it becomes an immutable part of this timeline and also gets a timestamp attached to it.

How is a transaction logged?

When a new transaction entry is made, it gets transmitted to a network of peer-to-peer computers, located across the world. This network of computers ensures validity of the transaction by solving equations. Once the legitimacy of the transaction is verified, they are clustered together into blocks. These blocks are chained together creating a permanent and irreversible ledger of all transactions, thus completing the transaction.

What are some benefits of blockchain?

Accuracy - Transactions on a blockchain network are verified by a network of multiple computers. With human involvement being next to none, it eliminates all chances of human errors. Any computational mistakes are also reflected on a single copy of the blockchain.
Lower Costs - With no third party verification required to verify a transaction, such as a bank or a notary, the associated costs are also eliminated.
Decentralization - None of the information on a blockchain network is stored in a central location. Instead, the information is scattered across a network of computers. The addition of a new block is updated by every computer on the network. This makes blockchain networks difficult to be tampered with.
Speedier transactions - Traditional financial institutions go through a structure established by a central authority to complete transactions. On a blockchain network, cross border transactions can also be completed in a matter of minutes. These networks are also not bound by time and timezones.
Secure networks - Once a block is created, its authenticity is verified by the entire blockchain network. Each block on the blockchain has its own unique identification number called the hash. When a block is added on a blockchain, it consists of its own hash, as well as the hash of the previous block it was attached to. Editing information on the block leads to a new hash, however, the block after it still uses the old hash number. This makes it difficult to tamper the data within a block.
Blockchain not only has been adopted by businesses worldwide, but it also is at the centre of the evolution of money with cryptocurrency. The technology has far-reaching applications and its full potential is yet to be discovered.