Change is a part of our lives, and changing for the betterment is always good for growth. Innovations take place every day, and through those innovations and technological advancements, we get to see many new things and updated in our daily life.
We have only heard that technology plays a significant role in the growth of businesses, but we have seen this with blockchain technology development. You must have heard about bitcoin, that is a digital currency that is entirely dependent on blockchain technology.
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It is one of the most simplified technologies that is decentralized and is also a distributed ledger that records all digital assets transactions. This article will learn about the latest technology, blockchain, and will learn about it and its usage in businesses.
What is blockchain technology?
Blockchain refers to a distributed ledger technology that records the history of digital assets like bitcoin and makes it transparent and unalterable via using cryptographic protocols and decentralization.
In this article, we will understand blockchain technology through a Google Document. When a user creates a document and shares it with a bundle of people, the Google documents get distributed instead of being copied or relocated.
This method generates a distributed chain among people that are given access to the document that is decentralized.
No user has to wait for the changes that the other party makes because all the alterations on the document are recorded in real-time, making the decentralized chain completely transparent. In reality, the process of recording transactions or data on the blockchain is challenging than recording on a Google document.
How does blockchain technology works?
There are three crucial concepts of blockchain technology that include blocks, nodes, and miners. Let us learn in brief about these concepts of blockchain.
A blockchain is a chain of blocks, and a chain contains numerous blocks, and each block comprises three main elements: data, nonce, and hash. The data is the information that is included in the blocks. A nonce is generated randomly when a block is generated, and it is a 32-bit whole number, which creates a block header hash. Moving to the hash, it is a 256-bit long number that is devoted to nonce.
Whenever a block is created, the cryptographic hash is generated by the nonce. And this makes the data in the block forever tied towards hash and none until the block is mined.
One of the main features of bitcoin’s blockchain technology is its decentralized nature. Decentralization means no organization or computer owns or is committed to a chain of blocks. As an alternative, it is a distributed public ledger that works through nodes connected to a chain of blocks.
It is unnecessary that nodes are computers, and it can be other electronic devices that preserve the copy of the blockchain ledger and make the network function properly.
Each node of the blockchain has its copy of the ledger. The network does its work of algorithmically approving the mined blocks required to be verified, updated, and trusted for a chain of blocks.
Blockchain is entirely transparent, and therefore every transaction or any action taken must be viewed and checked. Each user is assigned a unique alphanumeric identification number that displays users’ transactions.
Miners are the individuals that contribute a lot to the bitcoin network. The miners are assigned work of creating new blocks by verifying the transactions via the process of mining.
In bitcoin’s blockchain, each block is given its unique hash and nonce but is connected with the hash of its previous block in the chain of blocks that makes the mining process a complicated process, especially when there are large chains.
Miners tend to use specialized software with high computing power to solve complicated mathematical problems. Blockchain uses cryptographic protocols, and it makes it next to impossible for hackers to alter or manipulate the blockchain ledger.
Once the miners successfully solve the transactions and add blocks in the chain of blocks, they are rewarded with newly mined bitcoins to help them make money through the mining process.