It is possible that you have been hearing this word “blockchain technology”. It may be in the reference of cryptocurrency or Bitcoin. In this blog, we would be discussing blockchain info that is needed for the beginners in this area of cryptocurrencies. One thinks we can definitely say that digital currencies like Bitcoin were not possible without the existent of blockchain companies.
A Small History About Blockchain Technology
It is good to know a little bit of history on the blockchain technology. In the initial days, it wasn’t used for the cryptocurrency. Blockchain was started as computer science concept related to the domain of data structures and cryptography.
In the primal form of the blockchain was Merkle tree, also known as a hash tree. It was patented by Ralph Merkle in 1979, this data structure was used to verify & operate data between computer systems. It was important for peer to peer network sharing due to the chances of data alteration during this process. Blockchain also helps to ensure that false data shouldn’t be sent during the process.
In 1991 first cryptographically secured chain of blocks was created by W. Scott Stornetta and Stuart Haber. It was the first “secured chain of blocks” was created with help of Merkle tree (Hash tree).
The first blockchain was conceptualized by Satoshi Nakamoto in 2008, the next year Bitcoin Cryptocurrency was introduced in January 2009. It contains secured chain of blocks that are used for peer to peer network to verify coin exchange and managed autonomously without having any central body of authority. The blockchain technology was the main concept used in Bitcoin and after this, so many cryptocurrencies came to market.
What Is Blockchain Technology?
The blockchain technology developed after word 2009 was more sophisticated. The blocks are a series of data records, each block connected to the previous one. It contains the history of the entire chain thus it called a blockchain.
The blockchain is public domain in which two users form the computer network to do the transactions. The transaction will be securely stored, verify in a permanent way. The data about the exchange is stored in cryptographic blocks that are connected to each other in a hierarchical manner, this creates an endless chain of blocks hence it is called as Blockchain.
Important points to know about blockchain wallet or technology such as:
- Leader: blockchain keeps the record of all data transactions and these data records referred to as a leader in the digital or cryptocurrency world. Every transaction is stored in the ledger as a block.
- A Peer To Peer Network: This transaction is done through a distributed system for verification of each transaction with the help of a peer to peer network.
- Once a singed & verified transaction done could not be changed in the blockchain.
How Does Blockchain Technology Work?
Before digging into how blockchain technology works you should know the concept of keys. Basically, there are two keys “Private Key” and “Public key” each indusial holds both these keys for a transaction through cryptocurrencies like Bitcoin. Combining both keys will generate a digital signature. Your private key allows you to sign and authorize the transaction on behalf of you and the public key for other people will find you from your public key. In the digital world, these public keys are your blockchain wallet address. Your private keys give you the power to authorizing withdrawals, and transactions with your digital wallet through your cryptocurrencies like Bitcoin. It is so important to keep secrete your private key. If anyone knows your private keys they can handle your digital transaction with it.
How to do the transaction?
If two individuals want to do a transaction through cryptocurrency, both will have a private key and public key. Blockchain will allow the first person to use his private key to connect with the public key of the second person and the transaction will like this and it will form a block that contains a digital signature, time, other relevant information about the transaction. The identities of both people will not be stored during this process. After this, all this block will be transferred across the blockchain network for the validation of this transaction.
This information and validation requires abandon amount of computer resources and it not possible because of millions of users doing their online transaction with blockchain cryptocurrency. The solution to this problem is known as blockchain mining (you may be heard about Bitcoin Mining). Blockchain mining is another computer-related topic and we would like to recommend you to read it later.
Advantages and Disadvantages of Blockchain Technology:
We would like to tell you Blockchain technology is also known as the decentralized currency. You maybe hear about the decentralized currency. It is good to use decentralized currency because it will not be allowing ownership, corruption and unauthorized alteration.
The blockchain technologies still are in the phase of improvement. For the common person who doesn’t have a strong technical background not easy to understand the process of the blockchain. But the increasing popularity and use of cryptocurrency like Bitcoin, resulting in the blockchain leading into the mainstream by allowing lots more approachable resources. How may it look good but everywhere downsides are present and so blockchain technologies also have some drawbacks?
The Trading, buying and transferring cryptocurrencies involves the fees for transaction other things and it may be costly and inconvenient.
A 51% attack:
There is a concept of a 51% attack. Suppose I assume peer to peer networks of 51% validates or invalidates the transaction. It has chances that it will get approved and will add to the ledger. It may be not happening right now as cryptocurrencies like bitcoin network said that they able to control the majority of the network mining power (hashrate). But still, it is a security issue and might have a chance of it in future.
What are the blockchain applications?
The decentralized blockchain technology system will change your life. It will change from the way you manage your assets to the way you use your transact business. You can rent your car, and most important even prove who you are. Blockchain technologies will have the application in your banks’ transaction, hospitals, companies, and governments sectors
With this, we would like to conclude here. Hope that you may get a fair idea about what is blockchain technology. We try our best to explained blockchain system. You would like to read more on this technology (blockchain wiki) that will give more details just search blockchain technology wiki you will have more information about it. There are top future technology trends for 2019 and Blockchain is among them.