What is blockchain?
Blockchain is an innovative technology that has the potential to change the face of the tech world. Beyond cryptocurrencies, blockchain can be applied to improve efficiency and reliability across systems in many industries.
What exactly is blockchain?
Blockchain is, at its core, a way to store data. The system uses chains of data “blocks” that are linked to one another in chronological order. These blocks store information along with a time-stamp and digital signature in a highly secured manner using cryptographic methods to form a digital ledger of sorts.
Every block in a blockchain network stores data along with the hash or a unique identifier of its previous block. Storing the hash of the previous block makes sure the blocks are connected and organized. The process of creating a new block and adding it to the network is called mining.
Mining involves solving complex mathematical problems. Participants, who are also called nodes, earn rewards by mining new blocks. Different blockchains use different types of consensus mechanisms to keep the network secure and running. Besides incentivizing nodes with rewards like crypto tokens, the mining process verifies the transactions and keeps the network secure.
Unique properties of blockchain
Let’s go through the unique properties of blockchain technology, which are the main reasons for its popularity.
Decentralized: No individual or a central authority can hold complete control over blockchain technology. Every node using the network holds a copy of the ledger and is allowed to make real-time changes to the network. When data is verified by the maximum number of participants, the network accepts it.
Distributed: Blockchain stores data in a distributed manner and multiple hardware systems run the network at different locations. This eliminates the risk of a single point of failure, which can be observed in traditional systems.
Trustless: Blockchain is based on a trustless infrastructure. It allows users to make peer-to-peer transactions without intermediaries. For transferring funds on Bitcoin blockchain, you wouldn’t have to depend on banks or platforms like PayPal or Stripe.
Immutable: The data stored on the blockchain is immutable. In other words, unchangeable. Once data is stored on the blockchain, nobody can alter it. To change the data in one block, you would have to change data in all the blocks because each block stores the hash of its previous block, which is highly impossible.
Tamper-proof: Once data is stored on the blockchain, it cannot be tampered with or manipulated. Blockchain stores the entire history of the network and any changes made to the present data can easily be recognized.
We can already witness how blockchain is gradually disrupting the financial sector. With so many positives, experts believe it will expand to encompass a significant number of industries moving forward.
