What Is Blockchain Technology? How Does It Work?

A blockchain is a growing list of records, called blocks, that are linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree). The timestamp proves that the transaction data existed when the block was published in order to get into its hash. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.

Blockchains are typically managed by a peer-to-peer network for use as a publicly distributed ledger, where nodes collectively adhere to a protocol to communicate and validate new blocks. Although blockchain records are not unalterable as forks are possible, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance.

The blockchain was popularized by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin, based on work by Stuart Haber, W. Scott Stornetta, and Dave Bayer. The identity of Satoshi Nakamoto remains unknown to date. The implementation of the blockchain within bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications and blockchains that are readable by the public and are widely used by cryptocurrencies. The blockchain is considered a type of payment rail.

Private blockchains have been proposed for business use. Computerworld called the marketing of such privatized blockchains without a proper security model "snake oil"; however, others have argued that permissioned blockchains, if carefully designed, may be more decentralized and therefore more secure in practice than permissionless ones.

What is special in BlockChain?

It is one of the most searched queries related to Blockchain technology. But before learning this, we have to learn its history and how and why it was invented. Satoshi Nakamoto invented blockchain technology in 2008. It was invented to be utilized in cryptocurrency bitcoin as a public transaction ledger. Satoshi Nakamoto designed the blockchain to let users control their money without the assistance of any third party. The technology used to develop the blockchain was so highly encrypted that not even the government can access it.

But after three years, in 2011, the developer of Bitcoin and Satoshi disappeared and left the open-source software that knowledgeable users of Bitcoin can easily update. Blockchain brings a path-breaking technology that makes it easy to solve the issues related to double-spending without the assistance of any central server.

Why is there sudden hype about blockchain technology? 

Yes! It is true that there is a sudden hype related to using this technology. However, there are certain reasons behind it. In the past, there had been software claiming that anyone could earn digital money. However, all of that software failed.

The most prevailing issue about the blockchain is trust. Suppose an organization creates a new currency called X dollar; then how can you trust that they won’t loot your X dollar for themselves.

Bitcoin was specially designed to fix this issue utilizing an encrypted database called a blockchain. In a regular database like SQL, there is always someone who can change certain entries. There is a sudden hype around BlockChain as it has none to control it. It is run by its users. It can’t be hacked. So people can build trust with it.

Advantages as well as Importance of Blockchain technology 

BlockChain involves several highly advanced technologies to ensure the total safety and security of your money. Enhanced features make BlockChain irresistibly diverse.

Transparency

Transparency in the transaction makes blockchain one of the most trusted software. There are different types of blockchain. The public blockchain offers transparency due to its characteristics. This technology takes part in the functioning of different aspects of our society, including elections.

Immutability

Its immutability opens an array of opportunities for the platforms that require immutable traits to make their system more advanced and functional so that they can compete in the market. For instance, you can take chain supply. Immutability enables a company to ensure that there will continue no hamper during packaging in transit.

Digital Freedom

This technology offers digital freedom. You can enjoy centralized entities that offer connectivity associated with the economy. You can take your bank for example. A bank can block all the transactions or even confiscate the account if deemed right. However, when you are taking the blockchain into account, you can see that there is no centralized authority.

Easy use

For a knowledgeable person, blockchain technology is not difficult to use. The blockchain is not confined to a single particular use case. For its easy use, it can be used in every sector such as bank, trade finance, government, healthcare, oil, education, and so on.

Highly secure

The technology utilizes cryptography to add an extra layer of security to the information storing networks. Blockchain provides better security than other networks. It uses complex mathematical algorithms to ensure the highest security.

Enhanced Efficiency

Last but not least, improved efficiency is one of the most important reasons why blockchain is so important. Better security, intermediary removal procedures, and upgraded technology make it one of the most trusted means. Transactions only take seconds rather than one or two weeks to complete. International transactions have also become easier.