What is blockchain technology? How does it work?

A block in the blockchain is a series of transactions. Such blocks together form the blockchain, which is a system that records the information of these transactions. The blockchain system is highly secured and considered to be impossible to alter or hack. As more and more people participate in blockchain transactions, their transactions are added to the blocks’ series. A ledger is maintained for each of these participants, which is maintained in a decentralised database, known as the Distributed Ledger Technology (DLT).

Blockchain is the technology that maintains the record behind the trading of bitcoins. As a database, it is different from regular databases as it stores information in a chained sequence. The idea of a blockchain originated in the early 90s as a system where documents and information could be stored without the risk of being tampered with. However, the launch of bitcoin in 2009 gave a renewed importance to blockchain technology.

How does blockchain technology pperate?

The introduction of new data is recorded in a fresh block. Once a block is filled with data, it is added to the chain as a part of the usual blockchain technology procedure.

To go into further detail, each new transaction is transmitted across the world within a network of peer-to-peer computers.

This network performs a check to confirm the validity of the new transaction. Once the validity is confirmed, the transaction enters into a fresh block, subsequently forming part of a history of similar historical transactions.

Apart from bitcoin information, blockchain technology is also used to store any important business information like contracts and commercial data.

An important feature of blockchain is its transparency. Anyone entering the network can view the events happening in the blockchain. With their nodes, people can check the latest status and all the updates happening in the world of bitcoins.

The security of the blockchain is ensured through the use of hash codes. The hash codes convert digital transactions into a series of numbers and letters. Each block gets time-stamped, and it is nearly impossible to alter the content of the blocks in the chain.

The reason it is nearly impossible to hack blockchain is that any change in the hacker’s copy of blockchain will stand out among all peer-to-peer copies. The hacked copy will immediately be eliminated as it would be considered an obvious fake.

While bitcoin uses blockchain as the underlying technology, the use of blockchain can be extended to any important information that needs the famous blockchain blanket of security.

By Yahoo Finance