Blockchain is a constantly growing ledger technology where records and data are stored permanently for all linked transactions having taken place in a secure, sequential, and irreversible manner. Safe transferring of digital money, possessions, contracts, etc., with no requirement of a third-party go-between any bank or government, can be done using this technology. In this chapter, you will learn about the basics of Blockchain technology.
What is Blockchain?
A Blockchain is defined as a series of blocks in which each block contains transaction information. This method has been proposed to provide timestamps in digital documents, making it impossible to revert them or change their metadata. This can be defined as a software protocol that cannot run without the Internet. This can also be called meta-technology as it influences other technologies, such as a database, software applications, connected computers, etc.
A blockchain has as many blocks as transactions, and each block refers to the previous block; these are called blockchains. Blockchain technology is very effective because multiple copies of a Blockchain are spread across multiple computers via the Internet, which is impossible to alter.
Blockchain Characteristics and Components
- Ledger: Any file with a constantly growing record related to the transaction.
- Permanent: transaction means that once the transaction goes inside a Blockchain, it is stored permanently in the record and immutable.
- Secure: Information is stored securely through this technology as highly advanced cryptographic techniques are used to ensure that your information is locked within the Blockchain.
- Chronological: It means every transaction occurs after the previous one.
Who Uses Blockchain?
It has a broad discipline of uses as it can be integrated into multiple domains. As it acts as a distributed ledger over the Internet, it can handle cryptocurrencies and other promising areas of e-banking, fintech, government systems, insurance, healthcare, retails, and transactions.
Advantages of Blockchain
- Time reduction: Blockchain allows for a speedy resolution of trades with high reliability and security in finance. It does not take long to verify, settle, and clear.
- Unchangeable transactions: This technology has the characteristics of registering transactions in a sequential order that is used for certifying the inalterability of all operations, which means all the transactions are immutable; Therefore, modification is restricted, and the integrity of the data is preserved.
- Reliability: It certifies and confirms the uniqueness of each party of the chain, hence eliminating duplicate records, accelerating transactions, and reducing rates.
- Security: Blockchain uses SHA-256 hashing algorithm cryptography to ensure that the information inside the Blockchain is secured. It uses distributed laser technology. Each party will keep a copy of the original chain so that the system remains functional even if any node is separated.
- Collaboration: This allows each party to transact directly with each other without the need for a third-party intermediary.
- Decentralized: This is because no central authority supervises the entire system process. There are certain paradigms and rules on which each node interacts with Blockchain information.