Blockchain explained! Individuals from sectors like banking and investment are well aware of blockchain technology. In the last around one decade, blockchain applications helped Bitcoin and other cryptocurrencies grow immensely. But it does more than just powering the cryptocurrency world. Today, we witness blockchain technology in banking, healthcare, and various other industries.
What is Blockchain and how does blockchain technology work?
Although the technology is not a simple technology to understand, it is one of the most famous buzzwords in the technology field. Today, its applications aren’t limited to Bitcoin. But, its journey started from there. Let’s discuss in details.
Blockchain Technology: Definition & Advantages
Let’s start from the beginning. The technology came into power in 2009 when its major application Bitcoin crypto-currency grabbed the attention worldwide. The digital currency uses blockchain to exist. It runs on technology. In a layman’s language, blockchain technology can be defined as a digital ledger that helps record transactions over an online network. In the case of Bitcoin, it works as a public ledger to take care of online transactions of the digital currency. One of the most unique yet interesting things about it was that the currency couldn’t be tampered. It means the technology offered safety to Bitcoin crypto-currency.
Today, blockchain technology in banking is common. Banks use the technology to eliminate the use of middlemen to process payments or manage them. There are multiple advantages to using technology to handle various kinds of processes.
1. Blockchain technology is decentralized. It means there isn’t a single place to store data related to transactions.
2. It removes the need for a middle party to process transactions.
3. The technology makes transactions faster than traditional methods. Unlike the traditional banking system, it works efficiently 24/7.
Working Of Blockchain Technology
As the term suggests, blockchain is a chain of blocks. Here, block means digital information and chain means public database. It means blockchain technology is digital information stored on the public database. A block contains information related to a transaction, who is participating in the transaction, and unique information that makes the process different from other blocks.
Step 1: Transaction
Making a transaction is a prominent part. It is necessary to have a transaction. For example- Assume that you are making an online purchase. You navigate through different sections of an online store, choose the item you want to buy, and go through many steps to reach a point you want to make an online payment.
Step 2: Verify The Transaction
Like making a transaction, it is essential to verify it. Although it may seem an easy process to many, there could be thousands of computers from all around the world involved in it. However, a major part of the process is handled by computers themselves. In the case of making a transaction for buying an item from an online store, all the computers worldwide involved in the process work together to check if the transaction has taken place in the right way.
Step 3: Store The Transaction
After verifying the transaction, it is important to store it in a block. It happens after getting a green signal once the transaction’s verification is finished. The block includes the amount paid, the digital signature of the buyer, and the seller’s digital signatures. All these things are stored in the block. This makes the transaction become a part of numbers of other transaction.
Step 4: Give A Hash
The block needs to have a hash. Here, it gets a unique identity, which is called a hash. After the completion of this step, the block is added to the blockchain.
After blockchain explained and told how blockchain technology works, there are different applications that help understand its role in the modern-day world. For example- The technology has been serving as a tool in asset management, cross-border payments, blockchain IoT, supply chain, and various other sectors. Be a part of it and enjoy its applications.