Blockchain can be viewed as a platform for decentralized computing and information sharing that provides the ability for multiple authorities to collaborate and coordinate with each other to collaborate in decision-making and collaboration. Blockchain is a distributed, immutable, refutable, public record. To understand the basics of blockchain, you need to know three main features of blockchain:
• Immutability: Immutability refers to the property that each new block added to the blockchain is referred to as the previous block. This creates a permanent chain of interconnected blocks. Also, once deployed on the blockchain, no information present in the blocks can be modified. This preserves the integrity of the blocks and makes them immutable.
• Verifiability: Since the record is decentralized, the blockchain has its copy on all nodes participating in the blockchain network. This allows transactions to be easily and securely verified as there is no single point of failure.
• Distributed Consensus: Distributed consensus is a protocol that decides which node participant adds a new transaction to the blockchain. Since this is a distributed network, if most participants agree, only the proposed transaction will be added to the blockchain.
Blockchain Related Terms
Many terms are generally used in blockchain technology. To understand the basics of blockchain, it is essential to know these terms.
A block is a basic structure in blockchain that contains information and other primary details such as a timestamp, a hash of the previous block, a hash of the current block, and other details.
A timestamp is the details of the exact time a block is created in the blockchain.
Transactions refer to transactional data that has been collected and stored inside a block.
A hash is a cryptographic hash of a block generated by applying an appropriate hash function chosen for the blockchain to the data stored in the block.
5. Previous hash
The previous hash is the hash of the last block used to link the block to the last block present on the blockchain.
Different types of Blockchain
There are currently three types of blockchains: public blockchains, private blockchains, and consortium blockchains.
1. Public Blockchains: These blockchains store data in a public ledger that can be viewed by any user on the Internet. Users can edit and verify blocks and then add them to the blockchain.
2. Private Blockchain
The authority manages these blockchains and only authenticated and authorized users can access the data on the blockchains.
3. Consortium Blockchains
A group of organizations manage these blockchains and they can only modify the blockchains.
Common misconceptions about blockchain
1. Blockchain and Bitcoin are the same
Blockchain is the technology or rather the platform on which Bitcoin works. Bitcoin is just one example of how blockchain is used, and there are many other blockchain applications in the industry.
2. Blockchain is a Product
Blockchain is not a product, but a system with applications in all major sectors. Products can be built on blockchain technology with all the requirements for a specific use case.
Why is Blockchain important?
It helps in the authentication and traceability of multi-step transactions. Providing secure transactions reduces compliance costs, and speeds up the data. Another foundation of blockchain is that it can also be used in voting platforms and to manage titles and deeds. It offers a highly secure feature that helps conduct fraud-free transactions. In the blockchain world, it is impossible to corrupt data, resulting in data security.
Decentralized systems are also the foundation of blockchain, leading to it waiving multiple authority requests for approval. Blockchain transactions are conducted based on mutual consensus, resulting in smoother, safer, and faster transactions.
Prof. Khushboo Verma