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What is blockchain technology? How does it work?

Trying to learn about blockchain? From the government sector to the real state to trade to IOT to travel why is everyone obsessed with blockchain technology? Does this question bother you? Or simply, you want to unveil this mystery of blockchain technology? Whatever the reason is good news is that blockchain is easier to understand than that definition sounds. Here you can get to know this ingenious invention of the tech world known as blockchain technology and how does it work?

What is blockchain technology?

In simple words, Blockchain technology is like a diary, which is almost impossible to forge. Suppose 10 people decided to make a new currency and to keep a record of the flow of funds, they handed this to a person let’s call him Tom, who is going to keep the list of all the actions. And in the groups of 10 people let’s call him John, try to steal money, and to hide this he changed the entries in diaries.

Tom finds that someone has meddled with his diary, so to stop this from happening, he discovers a program called a hash. A hash function that transforms text into a number and letter set for example:

Input     Output

Cat        93g56gtf229hbno00r45sktrpbs59so9r3t7saer.

What is Hash?

A hash is a number and letter string produced by hash functions. A Hash function is a math function that uses the variable character and turns it into a string containing fixed characters. Even a little string change creates an entirely new hash. After each record, he entered a hash for example.

Miya give 5 coins to John

803c28370e9a16e628a23d46d3ebe711

John decided to change entries again. He secretly takes the diary and does the changes again the record generated the new hash.

Tom noticed that somebody had done the changes again, then he decided to complicate it again by recording each transaction. After each record, a record + last hash gets inserted. Each entry is therefore based on the earlier entry.

Input                                               Hash

Harsha give 10 coins to caroline-8977e7c112aea5boa62e9c5f3084a203

Miya give 5 coins to john-           e37a8d1cc39ed9f54afadbcbcafeb39

So, if John tries to change, the hash he has to do changes in all previous activity. But John was clever he counted all the hash and did the changes again.

But Tom was cleverer he decided to add a number after each record called nonce. The nonce is selected to have the hash generated ended in two zeros.

Now John has to spend hours choosing Nonce for every line to create records. The best thing about nonce is that not only people but even computers also can’t figure out the Nonce quickly.

But it is impossible to keep too many records, so Tom decided that when he will write 10000 transactions, he will convert them to a one-page spreadsheet. And when the transaction, gets checked it was right.

Therefore, Tom spread this spreadsheet to 5000 computers which were all over the world. And every time a transaction happens, these computers termed as nodes, accepted each node, and checks their validity. Every node checks the transaction via online voting where, some nodes will assume that the transaction is legitimate, and some nodes consider it to be a scam.

Computers referred to as nodes. The digital ledger or Blockchain copy gets included in each node. The validity of each transaction gets checked by each node. When most nodes say a transaction is valid, then it gets written into one block.

What is Block?

Well, you might be wondering what is the meaning of Block? One spreadsheet termed as a block. The whole block family termed as Blockchain. Each node has a Blockchain copy. Once several approved transactions reach a certain limit, a new block is formed. The best feature of blockchain is that it gets updated every 10 minutes, and there is no master or anything there to instruct the computer to do this.

Once the spreadsheet registry is updated it cannot be changed. Hence it becomes impossible to forge, only new entries can be added, and at the same time, the registry will be updated on all computers on the network.

How Secure is blockchain?

Although no system is “unhackable,” but the simple topology blockchain is the safest today. The purpose of blockchain is to let people, in particular, share valuable data in a secure & tamper-proof way.

Blockchains are protected by various methods, including advanced cryptographic techniques and enforcement and decision-making mathematical models. Blockchain technology is the underlying foundation of most cryptocurrency structures and prevents the replication or loss of this kind of digital funds.  use of blockchain technology is explored in

situations, where data immutability and protection are of great value for example Bank use, use in cryptocurrency, the healthcare uses, property record use, use in smart contracts, supply chain use, etc.

Advantages and disadvantages of blockchain

Blockchain technology has provided a range of advantages in various sectors and improved protection in dangerous environments. However, it also brings some downsides in its decentralized nature. For instance, blockchains have limited flexibility and need increased storage capacity compared with conventional centralized databases.

ProsCons
StabilityLow transactions per second
Improved accuracy by removing human involvement in verification.History of use in illicit activities
Data modificationSusceptibility to being hacked
Transactions are secure, private and efficientSignificant technology cost associated with mining bitcoin
Transparent technology
Reduction of costs by removing
verification from third parties

Wrapping it up

With numerous practical uses for technological applications already in place and under exploration, Blockchain finally takes on a name at the age of 27, partly due to bitcoin and cryptocurrency. As a slogan for any investor in the world, blockchain will enhance the accuracy, productivity, and protection of business and government operations.

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