Blockchain is fundamentally a time-stamped arrangement of immutable records of any information that is managed by a bunch of PCs i.e distributed network, not by any single entity. Each block of information is verified and linked to the next block using different cryptographic standards, in this manner a chain of blocks is formed and that’s why it is known as Blockchain. There is no central authority for the blockchain network. It’s progressively a distributed and immutable ledger with the data which is open publicly. So we can say that anything developed using blockchain innovation is transparent by its characteristics and everybody associated with it is responsible for his or her activities, for example – maintaining the private and public keys.
Blockchain is a data structure (a concept used to organize the data in a better way), you can understand it as a Linked List that contains data and a hash pointer which points to its previous block and subsequently producing the entire blockchain.
For Example : When we book a ticket of a railway through any application or the Web, the credit or debit card companies take its commission for the transaction. If we consider moving the whole movie ticket framework to blockchain innovation, at that point we have to consider just the two parties involved in the transaction – the railway and the customer. Each reserved ticket and other information is a block that is persistently added to the total ticket blockchain. In this case, each block added to the blockchain is tamper-proof and securely linked. Hence, in this case the complete blockchain is nothing but a record containing all transactions for a specific train journey.
Not only the blockchain innovation can help us transfer and store digital money, but it can also likewise replace every one of the procedures, different processes, and various business models. The blockchain is an extremely straightforward and effortless method for different types of data from A to B in a computerized and safe way.
Main Properties of Blockchain
Here are the three important properties of a blockchain that have made it a favored innovation in the market.
Immutability: Immutability implies that once something is gone into the blockchain, it can’t be changed or messed up with. The blockchain underpins this property as it stores information using the cryptographic hash function. Hashing refers to the way toward taking an information string (of any length) and giving out a fixed length string. In Bitcoins and other cryptocurrencies, various transactions are taken as inputs, and afterward go through explicit hashing algorithm that creates a string of fixed length. If a hacker attacks and attempts to change the information of a particular block, at that point it will affect the information present in every single previous block as every one of the blocks are interlinked through their addresses, hence the hacker will have to change all the blocks simultaneously which is not possible (we will talk about this later in detail). This is the thing that keeps the blockchain immutable.
Decentralization: Before Bitcoin came, in most of the transaction or financial systems, a centralized model was used in which all the information was stored in a centralized database. As we know, such frameworks do have a couple of vulnerabilities related to them, such as being simple targets for hackers, hard to upgrade, no appropriate backup if the system shuts down, and so on. Thinking about all these, the idea of decentralized model was introduced. In such models, the data is not stored by any central entity. Everybody in the system is the proprietor of the data. If anyone wants to connect with the subsequent one, both can legitimately cooperate with one another without the middle person or any third party. In the case of Bitcoins, we can send your money to anybody on the chain without going or experiencing a bank.
Transparency: A few of us comprehend that a blockchain gives us privacy while a few of us think about it as transparent. In a blockchain, everybody’s personality/identity is covered by a complex cryptography and is represented by their public address only. So suppose we want to take a look at someone’s transaction history in a blockchain, we won’t see something like ‘Alice sent $100’, we will see something like IBFF bhFLaBZz98vpF mvwT2TbyNECZJ sent $100. In this way, while the individual’s character is not disclosed but still we can take a look at all the transactions that individual has done using his or her public address.
This degree of transparency never existed before in any money related framework. If we consider this from a cryptocurrency perspective, we can basically take the public address of a user in a block-explorer and can see at all the number of transactions that the individual has transacted with. This is the thing that emphasizes various organizations using this innovation.
Types of blockchain technologies
There are three different types of blockchain technologies.
Public blockchain: Public blockchain protocols depend on the Proof of Work (PoW) consensus algorithm and are accessible as open source. Anybody can take an interest in these without permission or authorization. Everybody can download the code and begin running any of the nodes on their local computer to validate different transactions in the system. This procedure helps in deciding the condition of various blocks that get added to the main chain. Anybody in any part of the world can send their transaction through this system and can hope to see them incorporated into the blockchain in the event that they are legitimate. Likewise, anybody can take a look at the transaction on an open block-explorer. Every one of the transactions is transparent and Pseudonymous. For example, Bitcoin, Ethereum and so on, fall under the open or public blockchain category.
Consortium blockchain: Consortium blockchains are also known as federated blockchains which consistently work under the influence of a group. In contrast with open blockchains, they do not permit any individual with Internet access to take an interest in the process of transaction confirmation or validation. They are faster, scalable and even give more transaction security. Consortium blockchains are generally used in the financial segment. Here, the consensus procedure is in the control of a pre-chosen set of nodes. The privilege to take a look at the total transactions of the blockchain might be open or might be limited distinctly to the pre-chosen members. This kind of blockchain minimizes the data redundancies and the related transaction costs. For example, Hyperledger and Corda are blockchains that fall under the consortium category.
Private blockchain: Private blockchains contain various group and members who can without much of a stretch confirm different transactions internally. Here, writing or updating permissions of information are kept centralized inside only one association though read permissions may be open or limited. For example, managing the database and reviewing applications are consistently internal to a single entity. Private blockchains are extremely significant for centralized organization’s effectiveness and security from external entities. For instance, Multichain and Blockstack are private blockchains.
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