The term blockchain has become more ubiquitous in recent years, especially with the rising popularity of cryptocurrency. Despite hearing the term, many people are unclear as to what it actually is. While it was first used to develop cryptocurrency platforms, there is more it can do and even more to learn about it. Keep reading to learn the basic ins and outs of blockchain technology.
Defining a Blockchain
Simply put, blockchain is a digital collection of transactions which can manage records categorized by lists. Every record found here is called a block, while the list that links them together is called the chain. Nodes validate this data to confirm transactions.
Blockchain technology was initially developed for use with cryptocurrencies like Bitcoin. Therefore every Bitcoin transaction that a node makes is noted in the blockchain.
A blockchain consists of five main qualities, which include:
- Shareability. Transactions are communicated within the blockchain, making it easy to share. Even the node receives a copy of the transaction information.
- Transparency. It’s easy for almost anyone to see how blockchain technology works and to see the transactions taking place. However, despite its openness, no sensitive or identifiable information is revealed and security is taken seriously.
- No administrator. Blockchain technology does not require an administrator to make decisions about transactions. Instead, a votation happens among blockchain nodes. Everyone is involved, and transactions that get more than half of the vote are approved.
- Real-time changes. All data is kept up-to-date and revisions and edits are easy to see so everyone has access to the latest version.
- Record-keeping. Along with revisions, all transactions are documented in the system as they happen and can’t be altered or deleted later.
How It Works
To better understand how blockchain technology functions, we’ve laid out the steps from start to finish:
Step 1: The node requests a transaction. It could be the act of exchanging cryptocurrency, data, or just the initiation of a smart contract.
Step 2: The request is then submitted to the web of nodes known as a peer-to-peer (P2P) network. Peer-to-peer means that the transaction can proceed even without any intermediaries.
Step 3: Once the transaction gets into the system, it is placed in a block. All blocks pile up transactions until they are full.
Completion: Once the process is done, it gets stuck with other blocks, filling the blockchain. As mentioned above, once the transaction is part of the chain, it’s very difficult to get back to it and make alterations due to hash codes.
What Is a Hash Code?
All blocks are linked to each other through hashes. A hash is a unique code given to define every block. It includes the code of your block and the code of the block before yours. Therefore, before hackers try to steal your information, they would need to get the hash code of the block before yours. This boosts security and discourages any attempt to make changes in the block because of the sheer effort it would take. It also organizes the content and files to improve efficiency.
Blockchain technology is an excellent example of technology getting better and better over the years. It was originally designed to ensure security within a network and was the only technology that made digital money come to life after so many attempts. And as we look ahead to new technologies, the possibilities are endless of how we might use blockchain technology.
Interested in learning more about blockchain development? AscentCore can help! We work with companies to reach their goals using the latest technologies and deliver transformational results.