The word Cryptocurrency has become very popular in today's time, but Blockchain technology has a hand behind giving wings to this concept. This technology is the backbone of the crypto world. In this article we are telling you what it is and how it works.
Whether you are very interested in the financial industry or not, you must have heard of cryptocurrencies, such as Bitcoin, Ethereum and Dogecoin, among many other virtual currencies. The craze of cryptocurrencies has increased rapidly in the last few years, but behind this concept is the hand of blockchain technology. This technique was started in 2008 by a man - or several people - named Satoshi Nakamoto. (The real identity of its initiator is not yet known.) Blockchain technology is largely behind the success of bitcoin. There is a decentralized ledger, that is, an elaborate decentralized ledger, which registers all the transactions under the online peer-to-peer network, which works independently. It keeps track of every transaction happening on the network.
The function of blockchain is such that this system works without the control of any central authority. With this, users have complete control of their assets and transactions.
What is Blockchain?
To understand blockchain, let us compare it with database. Database is a collection of information of any system. For example, suppose a hospital database will contain information of patients, all information like staff, medicine, movement of patients etc. will remain in this database. Blockchain is also like a database. It collects information under several categories. These groups are called blocks and these blocks are connected to many other blocks, which form a chain of data. That's why this system is called Blockchain.
However, unlike normal databases, the blockchain is not controlled by a single authority. It was designed with a democratic thinking that it would be run by its users.
How does Blockchain work?
Simply put, blockchain is a digital ledger and any transaction that takes place on it is visible on every computer connected to the chain. This means that wherever a transaction occurs in the blockchain, its record will be recorded across the network. This is called Distributed Ledger Technology (DLT).
Understand it with this process of transaction...
1. Suppose a cryptocurrency user made a transaction.
2. The data of this transaction will go on the interconnected computers on the chain, and they can be accessed from anywhere.
3. If you want to check the validity of the transaction, then check it with an algorithm.
4. After confirming its validity, the data of this transaction is added to the block of all previous transactions.
5. This block is connected to other blocks, so that the information of this transaction is recorded in the ledger.
What are its benefits?
First of all, this technology maintains transparency because everyone on the network has access to every record. And above all, it is a decentralized system, that is, no one organization or person has control over it and no one person can control every data.
Along with being anonymous, it also gives security to the users. For example, if a hacker wants to hack a system, then he has to corrupt every block on the entire network. Even if a hacker corrupts a block, then that block can be identified only by cross checking, so these things make the blockchain secure.
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