What is blockchain? How does it work?
Blockchain is being popular these days but only 20 to 30% people have the knowledge of blockchain.
Blockchain is similar to the chain of blocks. It is the technology build on 2009 by “Satoshi Nakamoto” to create the digital crypto currency Bitcoin. A blockchain is a distributed ledger which is open to the public. Blockchain has the interesting property, once some data has been recorded inside blockchain it becomes very difficult to change it.
Each block contains DATA, HASH and HASH of previous block.
Data that are stored inside the blocks depends upon types of blockchain. For eg, bitcoin blockchain stores the data about details of Sender, receiver and the amount of transacted coin.
A block also consist of HASH. We can compare hash with the finger print. Hash is always unique like finger print. Changing something inside the block will change the hash inside it. So hash is very important and useful when we want to change the data inside the block. If the hash of the block changes it is no more the same block.
A blockchain also contains the hash of previous block and these creates the chain of the block and this technology makes the blockchain so secured.
Lets take an example.
Here are the chain of three blocks. Each block has hash and the hash of previous block. So block no 3 points the block no 2 and block no 2 points the block no 1. The first block is special block, it cannot pont to previous block or doesnot has the hash of previous block because it is the first block. This block is called genesis block.
Blockchain has something called Proof-Of-Work. It is a mechanism that slows down the creation of new blocks, in the case of bitcoin it takes about 10-15 minutes to calculate the required proof of work and add a new block to the chain. This mechanism makes it very hard to temper with the block because if you temper with one block you need to recalculate the proof of work for all the following blocks.
So the security of blockchain comes from its creative use of hashing and the proof of work mechanism.
How does the block chain works and how is it safe?
Lets be clear from example.
If the person from India to London . there is the need of third party mediator like Bank, western Union or paypal and this process takes atleast 1 to 3 days and takes much more charge. So this is the west of time and it does not work on emergency condition as it takes longer period. But by blockchain technology that money can be transferred to anyperson anywhere without any third party mediator and the transaction fee is also very low. Blockchain was start for the bitcoin but now there are many altcoins like Ethereum, Litecoin and others many more. In the blockchain every one can see the transaction of the individual so there is no chance of fraud . The transaction of the individual will be stored in 1000 of computer so it is very difficult to hack the blockchain. In order to hack the blockchain the hacker should hack 1000 of computer at the same time which is almost impossible. Many countries are using blockchain and investigating to use it in many services lime storing medical reports, criminal reports etc. in the bank transfer if one computer does not work the transaction may stop or delayed but in blockchain millions of computer work together and if 100 computer did not work the transaction will not stop.
Above article are simply explained with suitable example hope you all understood the blockchain and its benefits in all sector.
If you have any confusion or if i did any mistake in explanation please comment below.
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Photographer and Cryptocurrency trader
