The term Blockchain technology is well known in the Crypto world. The sudden rise of the price value of Bitcoins is attracting the eyes of investors. Small business owners are looking for opportunities on how to adopt Bitcoin in their business.
However, do you know what exactly Blockchain is and how it works? This useful guide will help you to understand it in the simplest way possible. It includes the following points:
- Blockchain: The Greatest Innovation of the 21st Century
- What Exactly It Is?
- How Does it Work?
Blockchain: The Greatest Innovation of the 21st Century
With the ability to distribute data without being copied, Blockchain is considered to be the greatest innovation of the 21st century. It’s the next big thing after the internet in the digital world. It is invented initially for solving the double-spending problem of cryptocurrencies. In this guide, you will understand what exactly Blockchain Technology is, how it works, what are the essential factors, and how you can use it to your advantage. For more information you can visit Ethereum code website
What Exactly It Is?
In simple terms, Blockchain is a record of time-stamped series of data that is immutable and managed by a network of computers and not by a single centralized system. Data in this network is encrypted by cryptographic encryption.
No central authority can control this decentralized system. Moreover, everything is transparent, and the data cannot be altered, copied, or deleted from the network. The transaction of data is visible to everyone in the network. Next, we will know about it with a simple example.
How Blockchain Works?
Have you ever worked with a shared spreadsheet on the internet? Just imagine that a spreadsheet is shared among thousands of computer networks. When any user in the network updates any changes, everyone can see the changes. Let’s get a more detailed understanding of the three blockchain pillars.
The Three Pillars of Blockchain Technology
Blockchain Technology gained popularity due to the following three excellent features it offers to different industries: decentralization, transparency, and immutability.
Before the invention of Bitcoin and BitTorrent, we were familiar with only the centralized services. It’s as simple as that; a central entity will control all the information flow in the network. For getting any information from the particular database, you have to interact with the central entity.
Our traditional banking systems work in a centralized system. Therefore, we don’t have much control over our money because you can only make payments through the banks. However, a decentralized system allows you to securely make transactions with another user without the need of a third-party like a bank.
This feature opened the gateway for cryptocurrencies to enter into the financial world. The transparency of the Blockchain network makes it more vital.
One of the common things that many people even don’t understand today about Blockchain Technology is transparency. They are confused about transparency and privacy. Let’s clarify everything here.
The transparency feature allows everyone to see the transactions in the network. However, one cannot know the real identity of the person making the transaction, which is secured by cryptographic identity.
That means, if you check the transaction history, you will see the public address of the person instead of his/her name. Next, we will know about the third interesting feature, i.e., immutability.
Anything that is once entered into the blockchain network cannot tamper with. The immutability feature is one of the best things that makes it versatile in the finance industry. In simple terms, it means it takes an input string and gives out an output string of fixed length.
Since the blockchain is not controlled by a single entity and works in a shared network, it’s truly a public network. With its decentralized system, it does not allow any hackers to corrupt the network. As a result, it has become the most popular technology in the financial world for keeping transaction records.