How does blockchain technology work
If you are someone who is a huge follower of financials or a tech-savvy, you might be familiar with the blockchain. Blockchain is a very booming word from the past 10 years. But, have you ever wondered what actually is this blockchain? Do you know how do they work? Before, directly getting into on how d they work. It is very important for you to know about the basics blockchain.
Keeping it clear, it is a series of digital information(which is a block) stored in public databases (chain). Block is invented by a group of people. They have a pseudo name called Satoshi and Nakamoto. A Block works with ledger technology. The transactions are digitally signed. Authenticity and integrity are the mainstay. A block usually stores the information regarding the transactions such as the date, time and amount spent. It also stores the information about whom your transactions are made. Each block has a distinguished from each other and is stored with a unique code. These codes are known as “hash”. Blockchains are free of a transaction fee. A bitcoin is the very first coin in a blockchain. As the bitcoins, there are many alternative keys present.
When a block is completely created it is secured with a code. You can also connect your blockchain to your system. Unlike a mobile phone update. You will get an update whenever a new block is added. Storing all the info on computers makes it difficult to manipulate. The information you store is secured with a digital signature and username. Blockchain is produced by a process called Mining. And the people who perform this process are known as miners. Miners are benefited when a transaction is made.
- Enhanced Security
- Easily track your transactions
- Efficient and increased speed
How does a blockchain technology work?
- Let’s say you the people you know have bitcoins. You want to go for shopping and you want to pay through the bitcoins. How do you pay? Here’s where blockchain comes into the action
- When you do a centralized payment your transactions are controlled by the government. But, when you do a decentralised transaction i.e, bitcoin. Your transactions aren’t controlled by any of the government. In fact, your transaction information is stored in and controlled by computers.
- Suppose if you’ve paid for your goods at any store or you’ve transferred your bitcoin. The system quickly traces and simplifies the “hash” in the block where the algorithm verifies the transactions. It traces all the details including the name, place and the person to whom your transactions are made
- After a verified transaction, it is stored and verified publically. When the transaction is completed you can not cancel it. It becomes unalterable. So, before making a transaction you need to make that your transaction is made to the correct person
- Here are the aspects of bitcoin mining
- Issue of new bitcoin
- Confirm transaction
- You can only reverse the transactions when there is zero confirmation. You will need three conformations if your transaction is above $10,000 and if the transactions are above $1,000,000 you will need six confirmations.
- Even though the transactions are publicly recorded, a user must use a programme called “wallet” to store the user data completely. A wallet is made of a public key and a private key.
- A public key is used to know the location where the transactions are made. You will even get to from where the bitcoins deposited and withdrawn. This key appears on the ledger which is used to make a digital signature.
- A private key is the shortened version of the public key which is created through an algorithm.
- A user will be unable to receive the payment from their public key. If the transaction doesn’t correspond to the private key.
- Blockchain technology is considered safe and confidential as it is impossible to generate a private key from a public key. This is the reason why most now a day prefer a blockchain technology and are crazy for the bitcoins.
Blockchain technology has impressed many traders and business with its easy transaction and security. Importantly the most reliable and confidential transaction. This is the reason why many are in the race to collect their set of bitcoins. Blockchain technology is truly worth.