Thanks to Bitcoin, today Blockchain technology is soaring in popularity. Most probably, you’ve also heard about the Bitcoin and its underlying technology “blockchain” for a while. But do you what exactly blockchain is and why you need to know about it. What makes blockchain secure and why governments all over the world are exploring its applications? There are several such questions that crop up in our mind the moment we listen to the word “Blockchain”.
So, to help you understand this revolutionary technology better, here we’ve listed a few things everyone needs to know about blockchain. This quick guide to five things that you should know about blockchain technology will clear your basic doubt.
- What is Blockchain?
Blockchain is a relatively new technology that first caught the attention of the general public when cryptocurrency bitcoin was introduced. A blockchain is basically a distributed online database of transactions which is managed on a peer-to-peer network of computers, which are referred to as nodes. It is a distributed ledger which is shared by multiple parties and trusted by everyone. Blockchain offers a decentralized way to chronologically document transactions, where each participant in the network has access to the entire blockchain and its history. This means the transactions recorded on blockchain are impossible to tamper, alter, or forge. In terms of structure, the database comprises of a series of “blocks” of information that is securely chained together, creating what has become known as blockchains.
- Eliminates Intermediaries
Blockchain makes it possible to transfer assets directly among participants without the need for third-party intermediaries like banks or brokers. When you make a payment through cheque, the other person can get funds only after the bank authorizes the transaction. But with the help of blockchain, there is no need for any intermediary as each block is secured by cryptography. Whether you want to transfer funds abroad or purchase stocks, blockchain ensures the authenticity of every transaction and makes financial institutions irrelevant.
- Blockchain goes beyond Bitcoin
If you think the only application of blockchain is Bitcoin and other virtual currencies, then you’re wrong. It is true that the most popular application of blockchain is Bitcoin but there are also many other uses of this innovative tech. In fact, various industries such as retail and logistics are already exploring the potential uses of blockchain. Not just this, blockchain can also be used for online voting to eliminate chances of fraud.
- Decentralized and Transparent
The blockchain technology offers transparency because all the recorded transactions are available for viewing. This is because whenever a transaction takes place over a blockchain, it is recorded and visible to all participants of the network in real time. This allows the members to see that a transaction took place without disclosing the true identity of the buyer and seller. It maintains an individual’s secrecy because participants are listed by unique alphanumeric character codes. It is a decentralized peer-to-peer network where a copy of the blockchain is saved on all of the computers of its participants.
Blockchain is difficult to hack because the transactions are heavily encrypted. It is impossible to reverse, delete, or alter the information on the blockchain because all data is recorded in a chronological manner and every participant has a copy of this data. It is due to this feature that several governments are adopting this tech to eliminate fraud.