What is blockchain technology?
The blockchain is a method of recording information that makes it impossible or difficult to change, hack or manipulate a system. A blockchain is a distributed ledger that replicates and distributes transactions over a network of computers participating in the blockchain.These repositories are commonly referred to as “digital books”.
Each transaction in this book is authorized by the owner’s digital signature, which authenticates the transaction and protects the transaction from unauthorized access. Therefore, the information contained in the digital registry is secure.
Put simply, a digital ledger is like a Google Sheet shared by multiple computers on a network that stores a record of transactions based on actual purchases. What’s interesting is that anyone can see your data, but you can’t corrupt it.
Why is blockchain so popular? Assume you are transferring money from a
bank account to a family member or friend. You need to log in to Online Banking and transfer money to someone else’s account number. When the transaction is complete, the bank updates the transaction record. Doesn’t that seem simple enough? There is a potential problem that most of us overlook.
This type of transaction can be counterfeited very quickly. People familiar with this fact are often wary of using this type of transaction, and as a result, third-party payment apps have evolved in recent years. But it is precisely because of this vulnerability that blockchain technology was born.
From a technical point of view, blockchain is a digital ledger that has recently gained a lot of attention and popularity. But why did it become so popular? Well, let’s dive into it to understand the whole concept.
Maintaining data and transaction records is an important part of our business. Often this information is processed in-house or passed through third parties such as intermediaries, bankers or lawyers, adding time, money, or both to the business. Fortunately, blockchain avoids these lengthy processes and facilitates faster transactions, saving time and money.
Most people think that blockchain and bitcoin are interchangeable, but in reality this is not the case. Blockchain is a technology that can support various applications related to various industries such as finance, supply chain, and manufacturing, but Bitcoin is a currency whose security depends on blockchain technology.
Why is blockchain so popular?
You are transferring money to your Girlfriend your bank account. You need to log in to online banking and transfer the amount.Once the transaction is completed, the bank will update the transaction record. Its take same times and proceess so broing.
People familiar with this fact are often wary of using this type of transaction, and as a result, third-party payment apps have evolved in recent years. But it is precisely because of this vulnerability that blockchain technology was born.
Technically, blockchain is a digital ledger that has received a lot of attention and attention these days. But how did it become so popular? So let’s get into that to explore the whole concept.
Data and transaction records are an important part of any business. Often this information is processed internally or shared with third parties such as brokers, bankers and lawyers, adding time, cost or both to the business. Luckily, blockchain bypasses this lengthy process and facilitates faster movement of transactions, saving both time and money.
Most people think that blockchain and bitcoin can be used interchangeably, but they really aren’t. Blockchain is a technology that can support a variety of applications related to multiple industries such as finance, supply chain, and manufacturing, while Bitcoin is a currency that relies on blockchain technology to ensure security.
Blockchain is a new technology with many advantages in an increasingly digital world.
Blockchain Working
You may have noticed that in recent years many companies around the world are incorporating blockchain technology. But how does blockchain technology work? Is this a significant change or just a simple addition? The development of blockchain is still young and may be revolutionary in the future. Now let’s start to understand this technique.
Blockchain is a combination of three main technologies.
Encryption Key
P2P Network with Common Ledger
Computing facility for storing transactions and network records
Encryption key consists of a private key and a public key. . These keys help to make a successful transaction between the two parties. Each person has these two keys, which they use to create a secure digital identification link. In the world of cryptocurrencies, this identification is called a “digital signature” and is used to authorize and control transactions.
Digital signature integrated with peer-to-peer networks; Many individuals acting as authorities use digital signatures, among other things, to reach consensus on transactions. When a transaction is approved, it is verified through mathematical verification, resulting in a successful secure transaction between two parties connected to the network. In summary, blockchain users use cryptographic keys to perform different types of peer-to-peer digital interactions.
Types of Blockchain There are four types of Blockchain
- 1.Public Blockchain Networks
- 2.Permissioned Blockchain Networks
- 3.Consortium Blockchains
Transaction Process
One of the main features of blockchain technology is how to verify and approve transactions. For example, if two people want to execute a transaction using their private and public keys respectively, the first party attaches information about the transaction to the second party’s public key. All this information is collected in blocks.
Block
contains digital signatures, timestamps, and other important and up-to-date information. Blocks do not contain the identity of the person involved in the transaction. This block is then sent to all nodes in the network, and when the right person matches the block with their private key, the transaction is completed successfully.
In addition to conducting financial transactions, the
blockchain can also store transaction details such as real estate, vehicles, etc.
Here is a use case that demonstrates how the blockchain works.
Hash Encryptions
blockchain technology uses hashing and encryption to secure data and primarily relies on the SHA256 algorithm to secure information. Sender address (public key), recipient address, transaction and private key data are transmitted using the SHA256 algorithm. Encrypted information, known as hash encryption, is transmitted worldwide and added to the blockchain after verification. The SHA256 algorithm makes it easier to authenticate the sender and receiver as it is nearly impossible to crack the hash encryption.
Proof of Work
. In a blockchain, each block consists of four main headers.
Previous Hash: This hash address finds the previous block.
Transaction Details: Details of all transactions to be performed.
Nonce: A random number given to encryption to distinguish the hash address of a block.
Block Hash Address: All of the above (eg previous hash, transaction details and nonce) are sent using a hash algorithm. This produces output containing a 256-bit, 64-character value called a unique “hash address”. Therefore, it is called the hash of the block.
Many people around the world are trying to calculate the correct hash value to satisfy a given condition using a calculation algorithm. The transaction ends when the specified conditions are met. Simply put, blockchain miners are trying to solve a mathematical puzzle called the proof-of-work problem. Whoever solves it first gets the reward.
Mining
. In blockchain technology, the process of adding transaction history to the current digital/public ledger is called “mining”. The term is related to Bitcoin, but is also used for other blockchain technologies. Mining is the creation of hashes of block transactions that are difficult to forge, protecting the entire blockchain without a central system.
How to Invest in Blockchain Technology
Blockchain technology and stocks can be a lucrative investment, and there are several ways you can take the next steps towards your first blockchain investment. Bitcoin is usually the first thing that comes to mind when investing in blockchain technology and should not be overlooked. Besides Bitcoin, there are also options to invest in penny stocks of cryptocurrencies such as Altcoin and Litecoin. There are also certain applications and services that are being pre-developed and financed using blockchain technology. As an investor, you can purchase coins with the expectation that their price will rise as a service or application becomes popular. Another way to invest in blockchain technology is to invest in startups based on blockchain technology. Finally, there is always an option to invest in pure blockchain technology.