You must know about bitcoin and cryptocurrency already.
In the last two years, CryptoCurrency took the world by storm and everyone wants to double their money by investing in it.
But, do you know how it works? What’s the technology behind it?
In this guide, we are going to learn about blockchain, and how it works.
What is Blockchain?
Blockchain is basically a shared type of database that differs from a typical database in the way it stores information.
Let’s understand this with a simple example:
Consider a google spreadsheet that is shared by every computer in the world through the internet. Every time someone changes something, it gets recorded onto a row of this spreadsheet.
So, it’s a shared spreadsheet which means that anyone with the internet can access the spreadsheet, right? And anyone can view and add a transaction to the spreadsheet.
But here’s the thing, the spreadsheet doesn’t allow anyone to edit the information which is already there.
This is blockchain. A system of recording information in a way that cannot be changed, hack or cheat the system.
The only difference is that the spreadsheet has rows, a blockchain has blocked.
A block is a collection of data. As new data comes in, it is entered into a fresh block. And once the block is completely filled with data, it is chained onto the previous block in a chronological way, much like a row of spreadsheet follows another row.
And connecting blocks together one after another makes it a chain of blocks( i.e a blockchain).
How does blockchain work?
The aim of blockchain technology is to allow digital information to be distributed and recorded among a shared network, but not edited. In this way, it is a foundation of record of the transaction that cannot be hacked, altered, deleted, or destroyed. this is why it is also known as Distributed Ledger Technology.
So now, you know what a blockchain is, let’s decode how a transaction a blockchain works with an example of an image.
Though bitcoin is only one example of a blockchain. it can be used in various industries to solve various issues.
Blockchain and Bitcoin
The very first and most famous application of blockchain is Bitcoin, a peer-to-peer digital currency for the modern, digital age.
Unlike traditional money, anyone can send bitcoin to anyone in the world without seeking permission from the banks or government. That is why it is decentralized because no one has control over it.
Bitcoins blockchain doesn’t care whether you are a machine or a human. Bitcoin nodes on the blockchain verify the legitimacy of the payments that makes it independent without the use of third-party intermediaries like banks.
