BLOCK CHAIN TECHNOLOGY
What is blockchain technology?
Blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network. A blockchain database stores data in blocks that are linked together in a chain. The data is chronologically consistent because you cannot delete or modify the chain without consensus from the network. As a result, you can use blockchain technology to create an unalterable or immutable ledger for tracking orders, payments, accounts, and other transactions. The system has built-in mechanisms that prevent unauthorized transaction entries and create consistency in the shared view of these transactions.
What are the features of blockchain technology?
Decentralization
Decentralization in blockchain refers to transferring control and decision making from a centralized entity (individual, organization, or group) to a distributed network. Decentralized blockchain networks use transparency to reduce the need for trust among participants. These networks also deter participants from exerting authority or control over one another in ways that degrade the functionality of the network.
Immutability
Immutability means something cannot be changed or altered. No participant can tamper with a transaction once someone has recorded it to the shared ledger. If a transaction record includes an error, you must add a new transaction to reverse the mistake, and both transactions are visible to the network.
Consensus
A blockchain system establishes rules about participant consent for recording transactions. You can record new transactions only when the majority of participants in the network give their consent.
How does blockchain work?
Step 1 – Record the transaction
A blockchain transaction shows the movement of physical or digital assets from one party to another in the blockchain network. It is recorded as a data block and can include details like these:
Recommended by LinkedIn
Step 2 – Gain consensus
Most participants on the distributed blockchain network must agree that the recorded transaction is valid. Depending on the type of network, rules of agreement can vary but are typically established at the start of the network.
Step 3 – Link the blocks
Once the participants have reached a consensus, transactions on the blockchain are written into blocks equivalent to the pages of a ledger book. Along with the transactions, a cryptographic hash is also appended to the new block. The hash acts as a chain that links the blocks together. If the contents of the block are intentionally or unintentionally modified, the hash value changes, providing a way to detect data tampering.
Thus, the blocks and chains link securely, and you cannot edit them. Each additional block strengthens the verification of the previous block and therefore the entire blockchain. This is like stacking wooden blocks to make a tower. You can only stack blocks on top, and if you remove a block from the middle of the tower, the whole tower breaks.
Step 4 – Share the ledger
The system distributes the latest copy of the central ledger to all participants.
Types of blockchain networks
👍👍