Blockchain, and how it works

Blockchain, as its name indicates, is an evergrowing chain of blocks and it is used for managing electronic cash in between people who know nothing about one another. It is a Distributed Ledger Technology (DLT) which is to support Bitcoin cryptocurrency. A global network of computers uses blockchain technology to manage records and data bases of bitcoin transactions.

fig 1. How does a Blockchain work

Each block contains a cryptographic hash of the previous block, a time stamp and transaction data. Blockchain monitors bitcoin transaction by calling decentralized network of volunteer nodes. Transaction is placed in a block by miners called special nodes. A major advantage of blockchain is that its database is not stored at a particular location and are public, which means no any version of information is available for a hacker to corrupt and is more user friendly. Each transaction is digitally signed to ensure its authenticity. There are three types of Blockchains networks. A Public blockchain, where anyone with an internet connection can become a validator. Private blockchain, where a person can join only by invitation of the administrator and Consortium blockchain, where it has restricted users and limited set of nodes.

Blockchain has a bright future scope in the field. It has already became a decentralized prediction platform and is helping local economies to grow. By 2030, most of the governments will adopt virtual currency methods, which is an advantage for this. Also, it has a great scope in the field of Internet of Things.

Also Read: How to lock and unlock your computer with a USB pendrive?


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