Blockchain is the most hyped term in today’s tech world. We heard at many places that Blockchain is the next big thing, Blockchain has a potential to change the world, etc. So, what is so special about Blockchain?
Blockchain is an invention by the group of people named
pseudonym, Satoshi Nakamoto. Ever since then this invention became so popular that it has the potential to completely eliminate few financial entities which are at the top in the market today.
What is Blockchain?
Basically Blockchain is the technology of storing the data in distributed environment on several machines which are not owned by single entity. Data is not copied but distributed by keeping it secure at the same time.
Blockchain comprises of the pieces of data or information called as ‘blocks’ which are connected via cryptographic principles (i.e. chain). For it’s setup there is infrastructure cost but as transaction cost its completely free.
The 3 main characteristics of Blockchain are:
- Decentralization: Traditional systems are mostly centralized where all the data is stored at one place called a server and the rest of the entities communicates with this server and exchange data. This server becomes an easy target for all potential hackers. The main disadvantage of these systems is if there is any kind of mess with this server, then all the data is gone. Blockchain employs a decentralized approach. Here, everyone in the network owns the information. In such a system, one entity can communicate with the other without contacting the third party and this was the key concept behind Bitcoins. You could directly send or receive Bitcoins to or from other users without any intervention of a bank or other financial institution.
- Transparency: When we say Blockchain is transparent, it does not mean that it’s insecure. While all the transactions are visible in the transaction history, the identities of the parties involved in the transaction are hidden. Physical names of senders and receivers are hashed so that it becomes more secure.
- Immutability: Whenever the sender wants to initiate the transaction, it creates a block, this block is verified by millions of computers distributed & connected via the net. The verified block is then added in the chain which is also stored over the net. So, this block becomes a unique block with a unique history. Once the block is entered in the chain it can not be tampered with, which makes it immutable. This property is the result of the hash function used.
Blockchain is a linked list of data with its hash pointer pointing to the previous block creating a chain. Hash pointer will save not only address of the previous block but the hash of it. So even if one block is attacked by someone, it changes the hash of other connected block which in turn change it’s data. This will completely change the chain and which is impossible.
So conclusively, this is the simple and completely automated way of transmitting information from one place to another in a safe & secure manner. Let’s discuss Blockchain in detail in our next article.
Do you like what you read? You may also like this interesting article about Internet of Things.