In simple terms, blockchain is used to write entries into a record of information and a team controls how the record of information is updated and amended. Likewise, Information on Wikipedia is not collected by a single person.
Not a single expert controls and edits the data. When a common user read a Wikipedia page, he reads the updated version of ‘master copy’ of the entry. The main control of the database remains with administrators to publish only quality, well researched and valid data.
Only central authority gets the permission from Wiki admins to access the database info.Wiki’s digital backbone is rather similar to the centralized and protected database that is used by insurance companies and banks.
Over the course of one-year period, the search for the keyword “blockchain” have increased by 250 percent. The most prominent application of blockchain is cryptocurrency. The U.S Senate had recently discussed this application. Several big companies have added the word to their company names which represent the importance of blockchain technology.
Blockchain- a Transaction Ledger
The term can be described as a transaction ledger. We can write new information on the ledger so the old information can be edited, changed or readjusted. This is done by cryptocurrency to connect the contents of recently added blocks with all the old blocks.
Any kind of new addition or change will invalidate the previously written data in all blocks. A very large number of systems are connected with each other to the network in order to control the system.
The system works to reduce the chances of hacking attempts, and to prevent the attacker from maliciously adding transactions on the network. That’s one of the big reasons why people trust blockchain and believe that the technology of blockchain is the future currency and will be used to create innovation in info and tech ideas.
The work results are shared with other systems on the same network for validation. The system connected to the same network must agree on the final conclusion. It means a single entity cannot take control of the data and information on the blockchain.
The beauty of this system is that anyone can see the transaction record which is published publicly for everyone to view and verify. In all blockchains are transaction ledgers.
When Was Blockchain Created?
The first application of blockchain was created 2009, with the name Bitcoin. Bitcoin is a cryptocurrency and it is created using the technology of blockchain. All cryptocurrencies are digital coins and run on the latest technology.
After understanding the concept thoroughly and deeply we can understand how the technology is useful for real-world usage and that how is it transferred. Bitcoin is created by a mysterious person or group named as Satoshi Nakamoto.
How Boes Blockchain Work?
Traditional currencies are controlled by central banks but Bitcoin has no such central bank. The blockchain is a decentralized currency, meaning it cannot be controlled by a single central authority. Minors or nodes are people on the network running their systems to solve complex arithmetic problems and to make a transaction process possible. For example, each transaction made by people originates from a wallet which contains a private key.
This key a digital proof and shows that only owner can access the wallet. Millions of transactions take place in the world. These transactions are grouped together and organized by strict cryptographic rules in a block.
This block is sent to the network of bitcoin which is made up of a high-powered system running by people. These systems work for solving complex mathematical puzzles to validate the transactions. The winner receives a bitcoin as a reward.
This validated bitcoin/block is added to previous blocks to create a chain of blocks called blockchain.
How the Blockchain is Tamper Proof
Each blockchain that is added to the previous blockchain has a hard, cryptographic reference. That specific blockchain is the part of a complex math problem which needs to be solved to bring a new block to the network. Part of solving problems include working on a random number.
This random number is called “nonce.’ which combine with other data such as transaction size and create a hash. Hash is a digital currency which is encrypted and secured. Each hash meets the cryptographic conditions. Hash is unique and once after the process of its formation is completed it is added to the chain.
A Brief History of Blockchain
Blockchain has a simple beginning as a concept in computer science. Before it was used in cryptocurrency, the primitive form was the hash tree. Ralph Merkle presented its data structure in 1979 and worked on it by verifying and using data through computer science.
According to science, it was necessary to validate data to make sure that no changing has been done during transferring the data. It provides the safe sharing of data maintaining the proof and integrity.
Why is Decentralization so Important?
The decentralized aspect of blockchain is discussed more than anything else. What makes it beautiful is it makes the blockchain indifferent to corruption, tampering, and censorship. Hacker cannot steal, harm or hack any part of cryptocurrency because of the unique and safest system of decentralization.
The copy of ledger is stored in my different locations that is why it is almost impossible to track every single block or modify it. Bitcoin has around 35,000 nodes in the only P2P network, no one can destroy or alter it in any way because thousands of nodes keep track of the ledger.
If someone tries to modify a block, the system will not accept the change, as modifying it is an untrustworthy way, other nodes will never approve it, and the transaction will not include to the ledger. Companies are adopting it because of its top of the line decentralized feature. At the ground level, the technology of blockchain becomes clearer. The idea of cryptographic keys can attract users to formalize and secure digital currencies.
Bob spread his spreadsheet diary over 5,000 PCs, which were in all over the world. On every transaction, the approval is received by the nodes. After the checking of the transaction, there is a kind of electronic vote, as some may approve the transaction calling it valid others may think it is a fraud. This happened because of Bob who wrote thousands of transactions and converted them into a single page spreadsheet.
There’s Always a Downside
Like any other system created by human beings, the system has a few downsides. The technology has a steep learning. People who are not educated enough to understand these terminologies have a hard time getting what actually the system means.
In fact, educated people also can’t understand all the jargon and concepts of computer science if they have not mastered the field. However, the popularity of crypto currency is increasing, and moving into the mainstream.
The popularity is resulting in producing more educational resources to make the topic approachable and understandable. Trading, buying and transferring cryptocurrencies such as bitcoin usually involve a transaction fee which is not affordable for many.
There are lots of developers, software engineers, enthusiasts and users who believe that the technology of block-chain is the future and that all other currencies will be replaced with the digital currency through block-chain.