Blockchain Explained:
Blockchain is one the buzz words in the cryptocurrency community. Only a handful of people understand what the technology is, or its connection to digital currency.
A blockchain is simply a distributed database. This database contains a record of all executed digital events or transactions shared among the computers on the blockchain network. Each transaction must be verified by larger percentage of the participants on the blockchain before their addition to the blockchain.
Blockchain technology is a multipurpose distributed software that is commonly used as a means of exchange. It allows assets to be transferred securely without the input of an intermediary. It also functions as a digital ledger for crypto transactions.
Therefore, the technology comes in handy for exchanging units of values such as titles, currencies and votes digitally. They can be stored, tokanised and exchanged on a network built on the blockchain technology. It also offers businesses, more efficient and faster means of processing orders, therefore, they can receive, transmit and track their orders without the fear of losing their data to cyberattacks, thanks to the security features incorporated in blockchains.
The technology is the foundation for cryptocurrencies and is gradually finding ways into regulated industries. Many industries leverage the power and security features of blockchain technology for their operations, which helps eliminate or reduce daunting challenges of traditional modes of operation.
Blockchain technology gained immense popularity with the release of Bitcoin in 2009. It is a peer to peer electronic cash system that highlights the true functionalities of a blockchain network. It is secure and decentralised, which implies that no central authority or group controls it.
Distributed ledgers and node are the driving forces behind the operations of blockchain technology.
What are these? Nodes:
The blockchain network is a connection formed by several computers. Each of the connected computers is referred to as a node. When a node is connected to the blockchain, the blockchain’s data will be duplicated and a copy is downloaded onto the system of the node so that it can sync with the newest block of data added to the blockchain. The nodes work together to ensure the blockchain’s security by verifying transactions before they are recorded on the blockchain.
Distributed Ledgers:
Blockchain’s data is not stored on a physical system or server, instead, they are stored on distributed ledgers or databases on the blockchain. A distributed ledger is a shared database for information storage in a blockchain. The database is synchronised across institutions, sites and geographies, thereby enhancing its security. Since everyone on the blockchain network can access the ledger simultaneously, it is difficult for anyone to alter or manipulate its content, therefore becoming one of the fundamental factors behind its top-notch security.
Advantages of Blockchain Technology:
Cost Effective-The absence of third-party verification is a cost-cutting mechanism. With the elimination of intermediaries, the cost of carrying out operations or transactions on the network is considerably reduced.
Less Time Consuming-Operations performed on the blockchain are faster, thanks to the absence of third parties or central authority that may prolong such operations. This explains why transactions are faster compared with transactions through traditional platforms.
Enhanced Security-The data stored on the blockchain cannot be tampered with by anyone as the data is stored on millions of computers on the network. Hence the system is well secured against the fraud and cybercrimes.
Since its invention over a decade ago, blockchain technology has gained immense popularity and acceptance thanks to the numerous benefits of using the technology and it will likely continue to evolve to bring more significant benefits.
Disclaimer: The content in this report is from the open source and for educational purposes only, therefore should not be considered as financial advice. We all know that the cryptocurrency market is highly volatile. Therefore, all the financial decisions should be made after doing your wide spectrum research.
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