Blockchain is creating buzz all around the world. The potential of blockchain technology is so immense that it is soon going to cause a revolution. More and more investors these days are drawing in attention and are encashing huge amount of money because now they know that it is going to go a long way and the future is pretty bright.
What is A Blockchain Technology?
Blockchain, the distributed ledger technology is a time-stamped, immutable series of record of data that is managed by several computers across the world, and not just by one supercomputer. Each block of data is secured with a cryptographic reference to the preceding block.
In 2008, the technology was invented to create Bitcoin, the original digital currency by a group of people or person known by the pseudonym Satoshi Nakamoto. When the bitcoins were first introduced in 2009, the blockchain technology did not immediately catch the attention of the tech industry. However, it did not even take too long for it to fire the imagination. Now, the technology that forms the basis of cryptocurrencies is seen as a breakthrough invention, with immense potential.
Moreover, Blockchain Technology is a combination of three technologies and they are:
- Cryptography of private and public key
- Public distributed ledger (Peer to Peer Network)
- Program or protocol (rules)
To understand blockchain technology we will now understand the sub-components of blockchain in detail.
1) Cryptography of private and public key :
- Public Key: As per its name it is open for all. It is available for everyone through publicly accessible directory
- Private Key: Private key needs to remain confidential w.r.t to its owners.
Below diagram represents a digital signature
2) Public distributed ledger (Peer to Peer Network):
A distributed ledger (also called a shared ledger, or distributed ledger technology, DLT) is a database, i.e. continuiously shared, and synchronized across multiple sites, countries, or institutions. No middleman required for monitoring and controlling the system.
3) Program or protocol (rules):
The way Blockchain works are determined by a protocol. They exist in different places. Whereas cryptocurrency protocols allows working of several apps like the crypto app itself. It gives security and access to the blockchain
Technology Underpinning Cryptocurrencies
Blockchain is the technology underlying virtual currencies. It is the technology that makes the cryptocurrencies’ peer-to-peer transaction process secure, fast, and free of regulatory control. Moreover, it ensures that the transactions can be verified by both the involved parties, and the record of the transaction is kept in a decentralized, public ledger.
One of the key features of blockchains is, the data can never be erased or changed, although anybody can enter it in the ledger, at any point of time. This makes the cryptocurrency exchange process transparent. Moreover, the ledger keeps the record of every transaction from start to end. Therefore, the biggest advantage is that, the data can’t be tampered.
Blockchain also eliminates the need for trust in the cryptocurrency exchange process. Trust is the foundation on which the conventional trading and payment methods operate, but blockchains works on the principle of “trustlessness.” The distributed ledger technology ensures that the integrity of the cryptocurrency system is maintained and the data is not manipulated. There is no middle authority to oversee “trust” when a cryptocurrency transaction takes place.
