So what is blockchain technology in simple terms? Blockchain generally defined as an advanced database technology. All the data stored is public and is easily verified. All the blocks are connected to each other. Share the access with your reliable business partners and they will be receiving the same information about the transaction in chronological order. Access to the chain is prohibited for unauthorized users. It’s an immutable ledger for many purposes.
Blockchain features
1➜ Security
Blockchain offers greater security than other platforms.
2➜ Privacy
Despite being anonymous and encrypted, all network nodes have access to data on a public blockchain accessible to everyone.
3➜ Power Use
Blockchain’s energy consumption is very high due to mining.
4➜ Private Keys
Blockchain’s dependence on its users is a limitation – if the keys are stolen there’s no other way for the user to access their funds.
5➜ Data Immutability
The immutability of data may be a disadvantage too. If someone uses a blockchain-based digital platform, they can’t erase its record.
6➜ Cost
Maintaining a chain is simply expensive.
How Does Blockchain Technology Work
The complex mechanism of blockchain may be explained by the following steps:
- Record the transaction The record shows the detailed process of asset movement from one party to another. The blockchain data contains all the details about the transaction, including who was involved in it, the time, date, place, and amount of the transaction, etc.
- Gain consensus At the start of the network, participants must agree that the recorded transaction is valid.
- Link the blocks Once the participants have reached a consensus, transactions are written into blocks. These blocks are linked to each other with the hash. Because of the hash, data tampering is easily detected as the hash value changes when data is being modified. Blocks are linked securely, and each additional block strengthens the verification of the previous block.
- Share the ledger The latest copy of the ledger is shared with all participants.
