October 2008 marked the introduction of an unknown developer – Satoshi Nakamoto – who ended up, much to the chagrin of the world, creating Bitcoin. Even more fascinating for the world was the underlying technology which is now getting to be known as the Blockchain technology. The industries around the world have been trying to uncover this technology that powers Bitcoin and are trying to discover if it has any utility or benefits within their system.
Overall, Blockchain has many benefits if incorporated in some industries and a lot of headway has been made in some of them. However, it does not make a case in most – but people have been trying to force Blockchain into those systems despite not having solid ground for use.
Hence this article to gain an understanding of how this technology works.
In simple terms, a blockchain is a history of transactions that have are time-stamped i.e. each entry or record has been embedded with a specific date and time, thus making the record unique. These records of transactions are managed by a network of computers specifically programmed to do so.
Each transaction is placed in a batch of records called – blocks; this is linked to all the other such blocks, before and after, via a set system of cryptographic algorithms. These records are immutable i.e. they cannot be changed at all.
Blockchain technology rests on four main pillars. The following is the gist of the Blockchain system – as a ledger, as well as a technology:
Blockchain – the ledger – is not owned by an entity or entities. This is what defines being “decentralized”.
The data on Blockchain is cryptographically stored on each node on the Bitcoin Network. This is what defines it as being “distributed”.
The data is being synced in real-time with the thousands of nodes in the network. This means the data on the Blockchain ledger cannot be tampered with. This makes the ledger “immutable”, which means it cannot be changed.
The ledger is an open network – which means that anyone can and track the data. Hence the Blockchain is “transparent.”
We will understand each of these characteristics, with their merits, in subsequent articles.
A huge number of projects are being worked up currently in various industry sectors, in particular, the finance sector. There are still many hurdles to jump over. Though, the separation of a Bitcoin-type cryptocurrency to create a private system that imitates the Blockchain technology is fraught with its own set of problems. However, it is inevitable that this technology can and will seriously disrupt many industries.
As written by self on my blog notjustcryptos.wordpress.com
