Blockchain, sometimes referred to as distributed ledger technology (DLT), makes the history of any digital asset unalterable and transparent through a decentralized network and cryptographic hashing.
It is a growing list of records (blocks), and the blocks are linked together using cryptography.
Analogy:
A simple analogy for how blockchain technology operates can be compared to how a Google Docs document works. When you create a Google Doc and share it with a group of people, the document is distributed instead of copied or transferred. This creates a decentralized distribution chain that simultaneously gives everyone access to the base document.
No one is locked out awaiting changes from another party, while all document modifications are recorded in real-time, making changes completely transparent. A significant gap to note, however, is that unlike Google Docs, original content and data on the blockchain cannot be modified once written, adding to its level of security.
The data storage of a blockchain is majorly seen as
Trustless
Fully decentralized
Peer-to-peer
Immutable
It is spread over a network of participants (nodes)
This technology consists of three crucial concepts for proof-of-work blockchains: blocks, nodes, and miners.
Blocks
They mainly contain:
A cryptographic hash of the previous block
A timestamp plus transaction data.
The timestamp proves that the transaction data existed when the block was published to get into its hash. As such, they form a chain, hence the name blockchain.
The recorded data in the block cannot be altered without altering all subsequent blocks. A P2P network can manage them as a publicly distributed ledger. Nodes adhere to a protocol to communicate and validate new blocks.
Although blockchain records are not unalterable and forks are possible, blockchains may be considered secure by design. They exemplify computing systems with high Byzantine fault tolerance.
Its Structure:
A blockchain is a digital ledger. As such, it is:
Decentralized
Distributed
Often public
It consists of records (blocks).
It is used to record transactions across many computers. Any block cannot be altered retroactively without altering all subsequent blocks.
Blockchain as a Value Exchange Protocol
A blockchain can be seen as a value-exchange protocol. A blockchain can maintain title rights. When the property is set up to detail the exchange agreement, it provides a record that compels both offer and acceptance.
Additionally, a blockchain has several layers, which include;
Infrastructure
Networking (node discovery, information propagation, and verification)
Consensus (proof of work/proof of stake)
Data (blocks, transaction)
Application (smart contract, decentralized application)
Blockchain is not only used for financial transactions. Due to its secure and transparent nature, the technology is versatile to needs beyond one area of expertise. Industries covering energy, logistics, education, and more utilize blockchain's benefits daily.
The main applications include:
Cryptocurrency
Cybersecurity
Accounting and record-keeping
Supply chain
Healthcare
Final Thoughts
Blockchain is an up-and-coming and revolutionary technology because it helps reduce security risks, stamp out fraud, and bring transparency in a scalable way.
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