The Blockchain technology is making big news since its invention and now it has evolved into a greater thing. Everyone is willing to have some Blockchain technology know how to be a part of this digital technology. However, only a few people understand the terminologies and terms being used in the Blockchain technology. In this post we will explain what Blockchain Technology is and how it works, so that it gets easier for the beginners to understand.
What is Blockchain technology?
Blockchain is a decentralized and digitized ledger of all the transactions that are being done digitally. The transactions of cryptocurrencies are recorded in this ledger in a chronological order, and it also allows the public to keep track of these transactions. Each of the computer or node that is connected to the network gets the copy of the blockchain that receives it automatically. Blockchain technology has now become the backbone of all the transactions that take place on the internet because it allows the digital information to be distributed.
How Blockchain technology works?
The Blockchain technology is now being used to verify the transactions. A ‘block’ is considered as a part of the blockchain and after a transaction is completed it becomes a part of the blockchain as its permanent database. There are numerous blocks in this blockchain which are connected to each other in a chronological order. Every block has a hash of the previous block and the blockchain has all the information regarding the addresses of the users and their balances. In short, there are three main functions of the Blockchain technology:
- Distribution of the digital information with a shared ledger
- Private key cryptography
- Security and record keeping
The main purpose of a Blockchain technology is to create a digital identity reference that is unique and secure. One of the main qualities of this technology is that it has a distributed network.
Advantages of Blockchain technology:
There are many Blockchain technology benefits, some of which are highlighted below:
- Blockchain technology is transparent and incorruptible as it checks itself within every ten minutes. This is sort of a self-auditing system and thus no information can be altered.
- This technology is very robust and durable and has no single point of failure. It can also be controlled b any single entity.
- The computing nodes make up the blockchain which create a powerful and durable second-level network.
- It offers a decentralized network which means that the network functions on a peer-to-peer basis.
- The information is duplicated many times across the network of connections or computers. The information on the blockchain is shared regularly.
- It is immutable which means once a transaction is shared across the network, it can’t be undone.
Disadvantages of Blockchain technology:
- The computation gets a bit slower and wasteful because each of the node has to repeat the tasks.
- Since the networks are new, they need a large number of nodes because of the widespread usage.
- There are higher costs because the completion of transactions is difficult.
- The transactions are slower because the nodes prioritize the transactions according to the rewards.