Blockchain as the name suggests that it is a chain of blocks having some mutual connection. A blockchain is basically a digital ledger (collection of financial accounts) that is duplicated and distributed across the entire computer network system on blockchain. Each block in the chain of computer network contains the record of number of transactions and for every new transaction on blockchain, record of that transaction is added to every ledger on computer network system of blockchain.The system used by blockchain is decentralized unlike that of centralized fiat currency system of government. In the decentralized system the proof of every transaction is available to every ledger or participant computer on network due to which there is no issue of fraud of transaction and builds trust between users.
Blockchain work on the principal of Distributed ledger transaction. DLT is the decentralized database managed by multiple participants in network. In blockchain every transaction is recorded with an immutable cryptographic signature known as hash.
Some of the main benefits of blockchain are that they are unhackable that is data if tempered anywhere it can be easily compared with another computers on network. So to change any data on blockchain anyone have to change every record on blockchain which is impossible to some extent. So blockchain is much safer and due to its safeness and many other feature it can be compared with internet technology in its initial days resulting in the rapid expension of bloackchain technology.
So anyone can say that blockchain is a future technology.
One of the many work that can be done using blockchain is transactions. We are going to some deep dive in that feature of blockchain that is transactions.Blockchain has solved the digital currency authorization and trust issue.
Some concepts to understand before we can understand transactions on blockchain are as
Cryptographic signature or keys are to protect records on blockchain and make it immutable.
Authentication- It is the process of validating or initiating a valid user transaction on network using cryptographic keys just like that of passwords, these keys are of two types private and public. These keys work as it is the way password works for wallets.
Authorization- It the process of validating the block of transaction by maximum number of nodes in the network by using proof of work.
Proof of work- Proof of work requires the ledgers or participants on computer network to solve complex mathematical problem to be able to add a block to the chain. Solving the problem is known as mining and miners are usually awarded with cryptocurrency for their work. In the simple words the process of authorization is known as proof of work.
Miners- The problem solvers and adder of blocks to chain are known as miners.
Mining- Winning incentives in chain by solving problems usually in form of crypto is known as mining.
For the transaction in the blockchain firstly the transaction is requested between users and authenticated using private and public keys having cryptographic signature known as hash. Then the transaction record is packed in a block and this block is forwarded to all the nodes or participant computers for authorization and when the maximum number of nodes vote for trusted transaction then the block is added to the chain. The process of authorization is known as proof of work in which some very hard mathematical problems are solved by nodes and they gets incentives in form of cryptocurrency for this proof of work. The controller of nodes are known as miners and and in the process the winning incentives as crypto is known as mining. After authorization the block is added to existing network of chain. And the new or updated blockchain after this transaction is send to every node on the network of computers , now the transaction is said to be completed.
The blockchain transactions are completely decentralized due to which the power to change the data from database is not in hand of one single entity that happens usually in which a centralized authority have power to change the data without consent of users. And we can say by this feature that it is a very good technology IN WHICH power is in hands of everyone in network(a kind of democracy haha).
Five transformations by blockchain tech that can make world a prosperous place-
· Protecting Rights through immutable records.
· Creating true sharing economy.
· Ending the remittance rip-off.
· Enabling citizens to own and monetize their data and protect privacy.
· Ensuring compensation for creators of value.
· And many more things to come
These are thing can be done using blockchain other than transaction purposes that is blockchain is not only for transaction purposes it is universal tech like that of Internet which made information flow easy across world. Blockchain can be compared to Internet in its initial days of growth and we can say that it is way much bigger than internet tech.
Example of Blockchain-A very good example of blockchain that I have experienced in recent days is that after doing our online classes on google meet the participants image screenshot(equivalent to attendance) is sent in class group and the proof of attendance gets sent to every student of class as soon as attendance pic comes in group unlike that of a class attendance register in which the power to change the data is only in hands of teacher and unknowingly we became part of a smaller blockchain to some extent having properties decentralized.
Now like every other technology blockchain has also some demerits or some small issues need to overcome for better future. This will be covered In our next blog.