A blockchain is a distributed ledger managed by a peer to peer network for inter-node communication and validating new blocks. It was invented in 2008 to serve as the public transaction ledger of the cryptocurrency. Blockchain is the backbone of the cryptocurrency and it enables the existence of the cryptocurrency. It’s invented for the king of cryptocurrency, Bitcoin. Participants can confirm transactions without a need for a central authority. Let’s know this technology behind cryptocurrency more deeply.
Blockchain: The Technology Behind Cryptocurrency
The blockchain technology is a simple way of transforming information from one node to another in a fully automated and safe manner. The list of records known as blocks is connected using cryptography. Cryptography is a method of protecting information and communications through the use of codes so that only those for whom the information is intended can read and process it. The blockchain technology is most commonly used by cryptocurrencies. Beyond Bitcoin and cryptocurrencies, Blockchain has many other applications too. Let’s look at them.
- Blockchain helps to maintain a long term, secure, and safe transaction records.
- Allows users to trace the records
- It helps to speed up the claims process by providing proof of insurance
Advantages of Blockchain Technology
Blockchain is an ideal technology for the transaction in a peer to peer network. Let’s look at some of the advantages of the Blockchain technology.
- The transactions using blockchain technology will be decentralized
- No third party interruptions in the transactions
- Blockchain transactions are public and transparent
- Blockchain carries no transaction cost
Blockchain and Cryptocurrency
Cryptocurrencies are made at the top of this decentralized technology. It is a digital form of money that is used as a medium of exchange within a network. Unlike fiat currencies, the crypto transactions are tracked through Blockchain technology. Bitcoin is the first cryptocurrency created and is known as the ‘king of cryptocurrency’ because of its popularity.
Blockchain technology can be used to develop social networks, messenger, games, social platforms, etc. so people believe it as “Internet 3.0”. The information in a blockchain exists as a shared database. This database is public and easily accessible for the intended persons. As this technology is decentralized, no centralized versions of the information don’t exist. This makes it more difficult for hackers to corrupt. Every transaction is validated through a sophisticated algorithm such as proof of work. The main advantage of this distributed ledger technology is that it cannot be removed, altered, or malfunctioned without the permission of the person who made the record.
The blockchain is all about bringing in transparency and efficiency into the existing systems which are running the supply chain. Bitcoin and other cryptocurrencies are dependent on this technology and it’s an inevitable part of the crypto. Every people needs to know about crypto and blockchain because it might be the world’s most important development.
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