What is Blockchain Technology? Everything about How a Blockchain Works!

By POOJA BISHT |Email | Apr 25, 2019 | 3495 Views

The most discussed and the most confusing term -'Blockchain', is one of the hottest technology to discuss in the present times. Blockchain is often confused with cryptocurrency which makes it even more interesting to explore among the potential readers of what a Blockchain is and which of its characteristics make it the most discussed nowadays. This article has been written in such a way so as to give you a basic understanding of Blockchain.

Must Read: Confused with Cryptocurrency? Here is a basic guide to understanding.

If we'll try to break the term Blockchain it would simply be defined as 'Chain of Blocks' which are nothing but a 'Chain of Records' linked using cryptography. Blockchain is an open distributed ledger and transactions between two parties get recorded in it in the form of blocks. Blockchain is hard to be hacked which make them the most secure mode of a transaction as compared with the conventional Banking system which can be robbed by thieves. "The root problem with conventional currency is all the trust that's required to make it work. The Central Bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts." - Santoshi Nakamoto, Founder of Bitcoin.

Blockchain was invented by Santoshi Nakamoto in 2008.
 Each Block gets added with each transaction 
that takes place between two authorized parties and the copy of every transaction is with every user who is active on Blockchain. Data once recorded in a Blockchain cannot be altered which makes it unique to work in. Every Block in a Blockchain contains 3 things in it- a) Data (which is the transaction detail when in the case of a Bitcoin transaction), b) Hash of previous Block (this is how each block in a Blockchain have some information of the previous block which if damaged or tried to be modified by an intruder can easily be seen in the next blocks), c) Hash (this is something which gets created whenever some data is stored in a Block and is unique to a particular Block).

To gain a fundamental idea about the 'Blockchain Technology' and 'How does it actually works I will recommend the following video to you. It will give you a strong base on that part.

The need for no third parties in the case of Blockchain makes it cheaper than the conventional methods of transactions where a third party is always required for a transaction between two parties which is a bit costlier. Low transaction costs make Blockchain even more acceptable by governments to include this technology for future transactions. While there is a long way to go ahead, awareness and fundamental knowledge about this new technology will serve the best in the present time.

Source: HOB