What is Blockchain Technology?
Blockchain technology is a relatively new technology to take over the online space. It is a digital database that records online activity and transactions. Any transaction on the Blockchain is stored in the form of blocks. This forms a chain, storing information on a real-time basis. Therefore the name Blockchain.
Blockchain is a secure repository of digital information. The Blockchain is completely encrypted. The information stored in the Blockchain is easy to verify and almost impossible to falsify. Blockchain is maintained on a decentralized and distributed network of computers. This means that it is not possible for fraudulent activities or any single entity to destabilize the entire system.
Blockchain is completely transparent and users can view their entire transaction history on the network.
Understanding How Blockchain Works
Let’s simplify Blockchain. Think of file sharing. We create a file and then send it to another person with whom it has to be shared. The second person will read the file, make changes and send the edited file back to the first person.
Now, think of file sharing as collaboration. Google Documents allows several individuals to view and edit the document simultaneously, similarly, Blockchain also collaborates transaction data and activity in real time. Everyone who has access to a Google Document can view the edits made by the other collaborators. Blockchain works on the same principle. Transactions are recorded and the database is updated instantly.
How Does Blockchain Validate Transactions?
Let’s take the example of a banking transaction. Sam wants to transfer Rs 500 to Ann. He has to verify that the money was actually received by Ann. Sam’s bank will have to log a record of Rs 500 being withdrawn from Sam’s account and credited to Ann’s bank account.
The use of Blockchain to record transactions removes the need for the bank or a third party, to verify the transaction. To ensure transparency, Blockchain uses Distributed Trustless Consensus to securely authorize the validity of transactions.
A Question Of Authenticity
Blockchain ensures the authenticity of records stored in the database through a form of Math called cryptography. Therefore, this negates the possibility of duplicating the information stored in the Blockchain.
Blockchain Offers Enhanced Security
Blockchain limits the chance of data theft because data is stored on several computers simultaneously.
Therefore, hacking the Blockchain is virtually impossible, because Blockchain uses encryption technology to secure information. Blockchain does not use traditional passwords to secure information.
Uses Of Blockchain
The future of Blockchain technology looks promising. The financial sector is already using the technology as a GUI for wallet applications.
Similarly, crowdfunding could also see a boost with the Blockchain technology. In a growing peer-to-peer economy, individuals want a more direct say in product development. Blockchain will help in creating crowd-sourced venture capital funds.
The Future Of Blockchain
With more and more people transacting digitally, the future of Blockchain technology looks promising. This futuristic technology has created a new Internet, which offers enhanced data security and makes online user experiences increasingly easy, transparent and secure. As a matter of fact, widespread penetration of Blockchain could also result in a decrease in phishing, spam and fraudulent online activities. Explore more by enrolling now on Acadgild, the best online course provider on Blockchain.