A blockchain refers to a decentralized and distributed, in most cases public, digital ledger that consists of records known as blocks that are applied in making transactions between several computers.
The technology ensures that a single block cannot be changed retroactively, in the absence of making alterations to other subsequent blocks. The ‘blocks’ in the technology comprise small digital pieces of information known as ‘hash.’ There are three parts to the digital bits of information that make up the ‘blocks’ in the blockchains. They are:
1. Information About Transactions
The ‘blocks’ in the technology are used in storing information about different transactions. This information may include the transaction date, time of the transaction, and the number of dollars involved in the transaction.
2. Information On The Persons Involved In The Transactions
When using this technology to make a transaction, a user is awarded a ‘digital signature’ that can be regarded as a unique username. This means that purchases are recorded without any actual user names.
3. Information That Distinguishes Block From The Others
When transacting using the technology, each ‘block’ is distinguished through unique codes known as ‘hash.’ These are cryptographic codes developed by unique algorithms. Transaction details may appear similar from earlier ones, but they are set apart using these unique codes.
How It Works
New data entry is recorded if a block collects new data. They comprise several blocks that are stored together hence its name. For a block to be attached to it, there are four steps involved:
1. The Occurrence Of A Transaction
The first step is for the transaction to be initiated by a user.
2. Verification Of The Transaction
Once the transaction has been initiated, the next step is for the network of networks used to verify the transaction. Verification involves confirming a trade’s details by recording details such as dollar amount, time, and participants.
3. Storage Of The Transaction In A Block
The transaction’s details are then stored in a block. Here they will be stuck together with other transactions only distinguished by the unique code.
The Block Is Awarded A Hash
The block is awarded a unique identifier known as ‘hash.’ Each block is added to the ‘hash’ of the newest block and then included in it. Once this is done, the new block is available for anyone to view it publicly.
Purpose Of The Technology
There are many uses of technology. As Christian Ellul says, ‘Blockchain Technology is the backbone of most Cryptocurrencies.’ The main ones are:
- The technology was designed to ensure faster and efficient transactions. The technology simplifies how we engage in online transactions hence simplifying how we transact.
- It allows for safe manipulation of the distributed ledger technology. When using the technology, users do not need a third party to manipulate their ledge hence making it highly secure.
- The technology makes free cryptocurrency via a decentralized environment.
- It offers excellent transparency. The technology is a type of a distributed ledger that is designed to provide enhanced transparency. The network participants allot similar documentation as compared to single topics.
- Minimal third parties are required. The existence of numerous third parties make transactions expensive in the long run. The technology’s purpose is to alleviate the third parties involved in transactions when making guarantees hence significantly reduce the costs incurred.
- The technology provides new authentication and authorization tools for digital transactions. These tools ensure that users can fulfill the requirements of several centralized administrators.