The term blockchain technology is well known in the crypto world. The sudden surge in the price of bitcoins attracts the eyes of investors. Small business owners are looking for ways they can use Bitcoin in their business.
However, do you know what exactly blockchain is and how it works? This useful guide will help you understand it as simply as possible. It contains the following items:
- Blockchain: The Greatest Innovation of the 21st Century
- What is this exactly?
- How does it work?
Blockchain: The Greatest Innovation of the 21st Century
With the ability to distribute data without being copied, blockchain is considered to be the greatest innovation of the 21st century. It’s the next big thing after the internet in the digital world. It was originally invented to solve the problem of double spending on cryptocurrencies. In this guide, you will learn what exactly blockchain technology is, how it works, what the key factors are, and how you can use it to your advantage. Please visit the Ethereum Code website for more information
What is this exactly?
In simple terms, blockchain is a timestamped record of series of data that are immutable and managed by a computer network rather than a single central system. Data on this network is encrypted using cryptographic encryption.
No central authority can control this decentralized system. In addition, everything is transparent and the data cannot be changed, copied or deleted from the network. The data transaction is visible to everyone in the network. Next we will find out using a simple example.
How does blockchain work?
Have you ever worked with a shared spreadsheet on the internet? Imagine that a table is shared across thousands of computer networks. When a user on the network updates changes, everyone can see the changes. Let’s understand the three pillars of blockchain in more detail.
The three pillars of blockchain technology
Blockchain technology has become increasingly popular because of the following three great features it offers for different industries: decentralization, transparency, and immutability.
Before the invention of Bitcoin and BitTorrent, we were only aware of centralized services. As simple as that; A central unit controls the entire flow of information in the network. In order to get information from the respective database you have to interact with the central entity.
Our traditional banking systems operate in a centralized system. As a result, we don’t have much control over our money as you can only make payments through the banks. However, a decentralized system allows you to securely conduct transactions with another user without the need for a third party such as a bank.
This feature opened the gateway for cryptocurrencies to enter the financial world. The transparency of the blockchain network makes it more important.
One of the most common things a lot of people don’t even understand about blockchain technology today is transparency. You are confused about transparency and privacy. Let’s clear it all up here.
With the transparency function, everyone can see the transactions on the network. However, one cannot know the actual identity of the person making the transaction, which is secured by a cryptographic identity.
That is, if you check the transaction history, you will see the person’s public address instead of their name. Next we will know the third interesting feature, which is immutability.
Anything that has once been entered into the blockchain network cannot be tampered with. The immutability function is one of the best things that make it versatile in the financial industry. In simple terms, it means using an input string and outputting a fixed-length output string.
Since the blockchain is not controlled by a single entity and operates on a shared network, it is actually a public network. With its decentralized system, hackers cannot damage the network. As a result, it is the most popular technology in the financial world for keeping transaction records.