Have you heard about blockchain? Don’t worry! Today in this post, we are covering all the information regarding blockchain. This information will help you to uncover the mystery behind this unique technology.
What is blockchain?
A blockchain is a series of blocks, each of which contains data. Information includes transaction details.
Let’s take the example of bitcoin cryptocurrency to understand this concept. Each block of Bitcoin cryptocurrency contains information like sender details, receiver details, and how many bitcoins are transferred? All this detailed information is saved in that block. That saved information is non-changeable. It’s a kind of ledger, where you can do any transaction in the form of digital tokens or currencies.
Blockchain technology is a secure medium for safe transactions. These items can be anything including money, contracts, properties, etc. Blockchain depends on the setup, which is composed of computer systems, a collection of databases, and some usable software.
Bitcoin vs. Blockchain – Same or Not?
No, that’s incorrect, bitcoin is not a blockchain. Bitcoin is a currency in digital form (or cryptocurrency) while blockchain is a medium or ledger which saves all the digital currency details like who purchases? Whom to sell? etc.
You can use bitcoin instead of cash in purchasing anything. But blockchain is the technology upon which bitcoin works.
How does blockchain technology work?
Blockchain technology basically depends upon 3 things – Blocks, Nodes, and Miners.
Each blockchain consists of different blocks and each block comprises 3 kinds of elements – data, nonce, and hash.
Data – Set of information saved in the block. .
Nonce – Nonce is a 32-bit whole number, which is created when each block is formed. This nonce further generates a block header called a hash.
Hash – In comparison with the nonce, the hash is bigger in number and concatenated with the nonce. This number started with 0.
Suppose the first block is formed, at that time nonce created a hash. Now the data in that block is signed and attached with the nonce and hash until it is mined.
Mining is defined as the process in which new blocks are formed and the person who is doing mining are called miners.
Each and every block is unique in blockchain technology. Each block has its own unrepeatable and unique nonce and hash. As a result, in blockchain technology, it is a really challenging process. Miners need big storage computer setups and advanced software to do mining. This unique software mainly works on some mathematical combination equations, that help to find a nonce that is attached to an accepted hash. The nonce is 32 bit and the hash is 256 bit, so we need to find a possible nonce-hash combination that could be mined. When that possible nonce is found, it is known as “golden nonce”, and finally that block is wedded or attached to the chain.
The best thing about blockchain technology is its decentralization feature. These are connected via nodes. Basically, a node is an electronic device that holds all the blockchain copies and makes them function.
Each and every node has its own blockchain copy.
Blockchain is a transparent technology you can easily check any discrepancy in the ledger.
Each consumer gets their unique alphanumeric identification number by which you check all your transactions easily in a hassle-free manner.
Benefits of using blockchain technology
- Blockchain technology is mostly implemented in cryptocurrencies (or digital tokens).
- These cryptocurrencies are consumed in buying or purchasing goods or any services.
- This blockchain technology provides cryptographic security for every transaction. That’s why using cryptocurrency is a secure and reliable way.
- To keep the record of every transaction, this technology is hugely used in cryptocurrencies.