WHAT IS BLOCKCHAIN-THE BASICS?

What is Blockchain-the basics

Are you interested in what is blockchain? Do you want to learn more about it? The interest around the blockchain technology keeps on rising and we may one day have to decide whether we should use it in our daily activities.Blockchain is a distributed ledger, which simply means that a ledger is spread across the network among all peers in the network, and each peer holds a copy of the complete ledger.A blockchain carries no transaction cost.Since it is a shared and immutable ledger, the information in it is open for anyone and everyone to see. Hence, anything that is built on the blockchain is by its very nature transparent and everyone involved is accountable for their actions.Think of a railway company. We buy tickets on an app or the web. The credit card company takes a cut for processing the transaction. With blockchain, not only can the railway operator save on credit card processing fees, it can move the entire ticketing process to the blockchain.

HOW DOES BLOCKCHAIN WORK?

1.Consensus ensures that the shared ledgers are exact copies, and lowers the risk of fraudulent transactions, because tampering would have to occur across many places at exactly the same time.

2.Cryptographic hashes, such as SHA256 computational algorithm, ensure that any alteration to transaction input — even the most minuscule change — results in a different hash value being computed, which indicates potentially compromised transaction input.

3.Digital signatures ensure that transactions originated from senders (signed with private keys) and not imposters.

The reason why it has gained so much admiration is that:

-It is not owned by a single entity, hence it is decentralized
-The data is cryptographically stored inside
-The blockchain is immutable, so no one can tamper with the data that is inside the blockchain
-It is transparent so one can track the data if they want to

Three Pillars of Blockchain

1.Decentralisation
In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins.

2.Transparency
Well, a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.

3.Immutability
In the context of the blockchain, means that once something has been entered into it, it cannot be tampered with. Immutability has the potential to transform the auditing process into a quick, efficient, and cost-effective procedure, and bring more trust and integrity to the data businesses use and share every day.

CONCLUSION

Blockchain technologies represent a fundamentally new way to transact business. They usher in a robust and smart next generation of applications for the registry and exchange of physical, virtual, tangible, and intangible assets. Thanks to the key concepts of cryptographic security, decentralized consensus, and a shared public ledger (with its properly controlled and permissioned visibility), blockchain technologies can profoundly change the way we organize our economic, social, political, and scientific activities.

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