Blockchain technology is a method of storing or recording information in such a way that it’s difficult or impossible to edit, hack, or manipulate the system. A blockchain technology is basically a digital ledger of transactions that’s copied and distributed across the blockchain’s wide network of computer systems.
It can also be referred to as a form of storing transactional records, also called the “block”, of the public in several databases, called the “chain,” in a network connected through peer-to-peer nodes. It may also be a variety of databases that keeps data in a very systematic way that makes it easy for users to access. As bitcoins and other cryptocurrencies are getting increasingly popular, block-chain applications enable the recording of sensitive data regarding legal contracts, property, medical records, or the other industry.
Types of Blockchains
Public Blockchain:
This type of blockchain technology is an open chain and does not require any sort of authorisation to join. Bitcoin and Ethereum are two popular examples of public blockchain, which are regarded as open source cryptocurrencies, which means anybody can use them. It is of a decentralised nature(dApp) and is not controlled by anybody, therefore, the general public can participate without authorisation.
Private Blockchain:
This type of blockchain operates on closed networks, in which only one private business or organisation has access to the entire network. With this type of blockchain, you can control who has access to the data or who to trust with it. Since it has a smaller number of users it tends to process hundreds of transactions per second. Ripple(XRP) and Hyperledger are the most common examples of private blockchains.
Consortium Blockchains:
A type of blockchain also known as federated blockchain is a type that has both public and private components with not just one organisation but numerous groups of organisations have access to manage this platform. The aim of this blockchain is to help businesses collaborate and since numerous organisations manage records, it will be very difficult for someone to get away with any form of illegal activities.
Hybrid Blockchain
Also referred to as permissioned blockchain networks are private blockchains that give special access to authorised individuals. It is a ground-breaking form of blockchain technology and is uniquely changing the world. It also helps businesses, organisations and governments manage their workflow and strengthen their systems by providing better solutions. The Ripple network and its XRP token are popular examples of hybrid blockchains.
The following are the few advantages of blockchain technologies;
- It is highly secure
- Allow Decentralised system
- It is programmable and can generate orderly actions, events and payments automatically when the basis of the trigger are met.
How Blockchain Technology Works
Blockchain technology’s main features is the way it confirms and authorises transactions. The block contains a timestamp, a digital signature and other important relevant data. It doesn’t include the identities of individuals involved within thetransaction. The block is transmitted across all the network’s nodes, and when the right user uses his private key and matches it with the block, the transaction gets completed successfully.
Everyone has access to the information or data on a blockchain, and they can see the full history of transactions going back to the day the block-chain was formed. Since any changes made to blockchains are immutable, the consent of a majority of the network’s members is crucial. Once a document has been changed, no changes could also be made; once a transaction has been completed, it can’t be altered or modified. Aside from conducting financial transactions, the Block-chain can also hold transactional details of properties, vehicles, etc.
The following cases will illustrate how blockchain technology works:
● Hash Encryptions
Blockchain technology uses hashing and encryption to secure the information, relying mainly on SHA-256 (a patent cryptographic function which outputs a value that is 256 bits long) algorithm to secure the information. The address of the sender (public key), the receiver’s address, the transaction, and his/her private key details are transmitted via the SHA-256 algorithm. The encrypted information is transmitted across the globe and added to the blockchain after verification. The SHA-256 algorithm makes it almost
impossible to hack the hash encryption, which successively simplifies the sender and receiver’s authentication.
● Proof Of Work
Includes people everywhere competing to be the first user to feature a block on the blockchain in order to be rewarded for their efforts. As a result, they’ll be allowed to invest in processing power. They have to find a hash value that meets a predetermined standard to receive this payment. This hash value aim is set months in advance. The miners vary the nonce value to search for an output that meets the specified
criterion. If the miner’s guess is smaller than the hash value, it’s allowed; otherwise, it will be refused. This proof of work is well verifiable by others due to the hashing method.
●Mining
Blockchain Mining involves adding a block to the blockchain and it is a very costly activity that consumes a major amount of electricity, computing power, and other resources within which the miner has invested. It involves generating the hash of a block transaction, which is tough to forge, thereby ensuring the safety of the entire Blockchain without needing a central system.
The components at which blockchain function includes;
- Data
- Hash
- Previous Data Hash
1. Data
The type of data stored in a block varies based on the blockchain. This maintains data about a transaction such as a sender, receiver and transaction amount if the data is about Bitcoin.
2. Hash
It is similar to a fingerprint and is also included in the block. Its hash is computed when
the block is completed. Hashing aids in noticing changes, so if anything changes within
the block, the hash will change as well.
3. Previous Data Hash
The final piece in a blockchain is the hash of a previous block. The hash of the
preceding block helps in the creation of a chain, and as a result of this particular feature,
this is exceedingly secure to trust and use.
Blockchain technologies are growing with time, launching new developments like smart
contracts which have shown to be exceedingly useful. Due to its successful operations,
The technology has captivated many people, since currency like Bitcoin relies on
blockchain technology to be secure.
