The blockchain is the technology that everyone speaks of but still, doesn’t understand what it is and how it works. Most people know one side that underpins digital currency, such as Bitcoin, Ethereum, Litecoin, and many other. However, blockchain has much more to offer apart from cryptocurrency. Today we’re going to talk about blockchain as a technology that opens up new opportunities in the app development world.
What Is Blockchain?
If not getting too deeply into tech talks, blockchain is a distributed database. It means that all data is distributed (or shared) across different computers all over the world via the Internet. To put it simply, Blockchain is similar to an accounting journal but a continuously updated and automatic one. It allows keeping the records of all operations in the order they happen.
Sounds too simple, doesn’t it? Then why blockchain is so special and widely spoken about?
The blockchain is a series of blocks that spreads among the distributed network made up of separate computers through a peer-to-peer connection that is also used for distributing and downloading torrent files. As it is, blockchain isn’t a pioneering technology. It takes advantage of the already-existing technologies to build a distributed network.
Blochain blocks can contain any information starting from the number of telephones in the storing room to vote counts and financial operations. Every block keeps the information secure and unable for any changes. Then the block gets a hash sum (unique temporary marking) that deters from accessing files without a private key.
The blocks are organized in chains, and any rearrangements or changes of the chain sequence are easy to discover. The system rejects the chains because of a mismatch in the structure.
Need more visual information on blockchain? Get the most straightforward explanations of blockchain to understand the technology that everyone is chatting about.
How Does Blockchain Work?
Members of a group or organization that uses blockchain have a private key generated with cryptographical algorithms. Though the keys allow the members to get access to the blocks, they cannot modify or rearrange the chain.
When talking about cryptocurrency, this is a satellite feature that allows conducting fund transfer operations earlier supported by banks only. The blockchain is all about establishing trustful relationships and secured identification since it’s impossible to change the blocks as well as the chain even with a key.
It means that essential bank functions like identity verification and registration of transactions can be performed by a chain of blocks more precisely and more secure. By storing the identical blocks of data across multiple devices, blockchain allows controlling the information and minimizing system errors.
The blockchain is, indeed, the technology that provides the highest level of recording and authentication. It helps eliminate missed transactions, machine or human errors, and even changes. Besides, blockchain helps guarantee that all transactions are legal and recorded in the distributed network of registries connected via a secured authentication mechanism.
Developing and testing distributed apps can be difficult since developers have to pay more attention while testing and debugging software that should run on multiple machines and coordinate over a distributed network.
Blockchain: How It Works
- The transaction request is broadcasted to a P2P network.
- The network consists of a few computers known as nodes.
- The nodes check the transaction and verify or deny it.
- A verified transaction joins other verified transactions to form a new blockchain block.
- New blocks join the existing chain, and now they cannot be changed.
- After going such a long way, the transaction is completed.
Where Can Blockchain Be Applied?
Taking into account that blockchain is a free, open-source, distributed and reliable database, it can be used to manage a wide range of human activities including banking, business, and government-wise.
Developers are working on a decentralized internet platform to increase the security as well as the resiliency of the Web.
Smart contacts can be built on the ledger’s top and work as decentralized apps. With such contracts, any party is unable to change anything.
Bitcoin urges the need for decentralized exchange markets that cannot be shut down or hacked. Apart from the highest level of security, such markets allow trading without any intermediaries and any fees.
Distributed cloud storage avoids the need to store sensitive data under one roof. As a result, all personal data is distributed through a network and encrypted in blocks.
Decentralized Social Networks
Nowadays social networking sites are centralized and prone to the leaks of personal information. So when the information is decentralized, it brings down the chance that any information can be stolen.
P2P messaging can leverage blockchain technology to encode messages and store data bits on multiple computers where they can be accessed with a private key.
Proof of Ownership
Purchased items could be tracked on the blockchain to prove the ownership and prevent the sale of stolen things. As a result, it can help discourage people stealing goods for the sake of getting money.
All the property titles, historical value, and transactions can be stored in the blockchain ensuring the highest level of transparency and reducing the cost and time required to conduct real estate transactions.
These are only some of the opportunities that come out with the new technology. However, blockchain is a complex technology leveraging the informational security. It’s not only about Bitcoin or other crypto issues. And neither it is difficult to understand. The blockchain is one of the ways to store data. We hope that our article helped you find out what the term “Blockchain” stands for and it doesn’t sound scary anymore.