What is the blockchain?
A blockchain is a collection of transaction records linked with each other, strongly resistant to alteration and protected using cryptography. Those transactions show the movement of an asset that can be tangible (a product) or intangible (intellectual). The data block can record the information of your choice: who, what, when, where, how much and even the condition of the asset.
In other words, a blockchain is made of multiple computers connected to one another storing transaction data simultaneously. Blockchains are monitored and can be accessed by multiple peers at any time. So every time new information has been received, a copy of that action is given to every peer. Therefore, if someone tries to alter a transaction’s data, it will only change on their own computer; thus everyone will notice that fraud has been committed.
Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved. This technology creates an unchangeable ledger that eases bookkeeping and asset tracking, making it difficult or almost impossible to change, hack, or cheat the system.
Why is the blockchain important?
Information is crucial for any aspect of life. Professionally speaking, having clear and transparent information is crucial for a successful business. The faster it’s received and the more accurate it is, the better. The technology behind a blockchain is ideal for delivering information. It provides immediate, shared and completely transparent information that can’t be forged but can be accessed by specific members of a network.
How does blockchain technology work?
These blocks form a chain of data as an asset moves from place to place or ownership changes hands. The blocks confirm the exact time and sequence of transactions, and the blocks link securely together to prevent any block from being altered or a block being inserted between two existing blocks.
Blockchain technology has become so relevant nowadays because of its decentralised system’s efficiency. Its open-source code removes the intermediary person that keeps everyone’s transactions. In other words, with a blockchain, there is no need for a bank that looks out for every transaction, as this is done automatically.
The blockchain is a type of distributed ledger technology (DLT). The way it works is by recording data in multiple systems at the same time. Unlike traditional databases, the blockchain is not stored on a singular central system, making it almost impossible to hack.
The specific elements of a blockchain depend on its type but the overall process behind them is:
1. A transaction is requested
2. Block gets created
3. Block gets sent to the network for approval
4. Block is validated
5. Block is added
6. Transaction completed.
What is the anatomy of a block?
As the name explains, it is a chain made out of blocks that contains unchangeable information available to the public. Each of those blocks contains data relating to asset transactions. In simple terms, a block will contain details of actions made when that block was created – i.e. hash – and the transactions that were made before that – i.e. previous hash -; creating a chain of information (hence: the blockchain). As each transaction occurs, a new “block” of data is created to record this. Each additional block strengthens the verification of the previous block and hence the entire blockchain.
Each particular block has the following properties:
The block height refers to the number of blocks that are between the particular block and the genesis one.
It means Number used ONCE. It is a pseudo-random number that is utilized as a counter during the process of validating transactions, i.e. mining.
The term “hash function” is derived from the French word “hacher” which means to “chop into small pieces”, indicating how a hash function is designed to “chop” the data. During hashing, all data is looked at to create a unique reference from it.
They will completely change if any part of that data changes, even by the slightest amount. Moreover, It’s very easy to double check that a given hash came from a given piece of data, but very difficult to tell what data was given just from the hash
The hash from the block that was made before. To confirm nothing gets tampered with, each block stores the hash of the block before it. That way, if there’s ever a discrepancy between the two places the hash is stored, you’ll know something’s gone wrong
Can the blockchain be hacked?
Short answer, no. Every device on the blockchain has access to all the different blocks, and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. Each participant is given a unique alphanumeric identification number that shows their transactions.
Combining public information with a system of checks-and-balances helps the blockchain maintain integrity and creates trust among users.
What are some examples of blockchain technology?
Blockchain’s most well-known use (and maybe most controversial) is in cryptocurrencies. Cryptocurrencies are digital currencies (or tokens), like Bitcoin, Ethereum or Litecoin, that can be used to buy goods and services. Just like a digital form of cash, crypto can be used to buy everything from your lunch to your next home. Unlike cash, crypto uses blockchain to act as both a public ledger and an enhanced cryptographic security system, so online transactions are always recorded and secured.
NFTs are another great example of blockchain technology in use. Read our blog to learn more about them.
Will blockchain change the world?
It already has. It is providing a system where data is stored more securely and efficiently. In fact, Barclays has launched a number of blockchain initiatives involving tracking financial transactions, compliance and combating fraud. It states that “Our belief …is that blockchain is a fundamental part of the new operating system for the planet.”
Blockchain technology can go from finances and medical records to housing or business admin. The technology is already here, we just need to adapt.