You may read many blogs before about this technology, but if you still can’t find your answer, then this time, you pick up the right blog. We will discuss what blockchain is, why we need blockchain technology, and its works.
In simple words, blockchain is nothing but a chain of blocks, and these blocks are connected.
One important question triggers in our mind If blockchain is a chain of blocks, then what is the block, how they look like and what they do, etc.
A growing list of records is called blocks, and every block connected each other using cryptography.
Each block contains a hash value of the previous block, updated data, and the date-time details.
If you don’t understand it, no worry; below, the blog is all about the blockchain from history to present and present to the future—everything you need to know about this technology.
What is Blockchain technology?
As we know, blockchain is just a chain of blocks, and when we said “blocks,” it represents digital information. When we said “chain,” it represents that particular network system that makes this technology anonymous.
Blockchain is made with three important concepts. One is “Blocks,” the second one is “nodes,” and the third one is miners. So let’s discuss one by one.
Blocks in blockchain technology
It tracks and records your data like date, time, how much money you spend on purchasing something.
It stores transition information. Other platforms like eBay, amazon save pieces of information like who is participating in this, their name, and additional account information. But with blockchain, you buy anything without giving your necessary information. Your information is recorded with a unique digital signature.
Blocks also have data that distinguish them from other blocks. It is just like your book has page number on it, and because of that number, we can differentiate between page 48 and page 50. By observing these two pages, we can say there is a missing page, 49 right. Just like that, blocks also save this type of data called “hash,” which allows us to identify that this block is different from other blocks.
Chains have multiple blocks, and every block has 3 elements.
- Stored data on a block
- A randomly generated 32-bit number, which we call nonce. Later this nonce helps to create the hash.
- Hash is the 256-bit number.
Whenever a block got created, a nonce creates the hash value.
Miners in blockchain
Miners create new blocks in the chain, and this system of creating a block is called mining.
Mining a block is a complicated task to do. Because every block required its own unique nonce and hash, it is also linked with the previous block’s hash value.
Finding a nonce that accepts hash make mining difficult for miners. For perfect matching, a miner should match around 4 billion possible combinations of nonces and hashes. (a nonce is a 32-bit number, and hash is 256-bit, which create 4 billion possible combinations )
When miners successfully found that perfect match, they called it “golden nonce,” After founding it, their block is added to the chain.
When changes are accepted by all nodes of the network, the miner got rewarded with money, and the block is successfully mined.
It is difficult to make any changes to the existing block. Even if you found the golden nonce, you can’t change it. If you change then, you have to change that all blocks which come after that one, and you can’t change every block; that’s why itis extremely difficult and non-reversible.
This is the secret behind the security of the blockchain system.
Nodes in blockchain
The concept of blockchain is introduced in 1992. Creators of the blockchain system want to make decentralization of data. It means no one computer or organization can store all blockchain’s data. Instead of it, the data is distributed through nodes connected to the chain.
Nodes can be any type of electronic device which maintains copies of the blockchain. It means every node have their own copy and the system should approve any newly added block algorithmically.
This makes blockchain more transparent, and one can check every action very easily.
Every node has a unique alphanumeric identification number that shows their transactions.
This technology makes blockchain secure, untraceable, and transparent. Just think how cool it is; if someone wants to trace you, they found the money is transferred to some id, they know how many transactions have done, but they can’t find who does the transaction.
Many countries ban this technology because of its anonymous quality.
Use of blockchain
Bitcoin’s transactions are stored in the blockchain. Blockchain technology can be implemented in many areas. Nowadays, blockchain is mainly used for cryptocurrencies. Bitcoin is a great example of it.
Almost every cryptocurrency company is already implementing a blockchain system.
Companies like the Bitcoin network and Ethereum network use blockchain technology.
Facebook also have their own cryptocurrency called Libra, and it uses the blockchain system.
A key feature of smart contracts is that you don’t need any trusted third party while singing any contract. All process is going through blockchain technology.
This may reduce time and increase trust over transferring value, and people can easily transact at a higher level.
Likely, every financial industry uses distributed ledgers for banking purposes, and in a study conducted by IBM, this occurs faster than expected.
In December 2018, a bank in Europe called Bitwala launched its first regulated blockchain banking solution. Where people can deposit euro and bitcoin.
Cryptokitties is a blockchain-based video game, launched in 2017.
This game came into media when a crypto kitty character, a virtual pet, was sold for more than a hundred thousand dollars($100,000).
Blockchain is also used in peer to peer energy trading.
At this time, we are facing a covid-19 pandemic globally. In response to this, the wall street journal reported that Ernst & Young was working on blockchain technology to help gov employees, other employees, airlines, and others keep track of people who have antibody tests and be immune to the covid-19. 5G technology also can help for health care segment.