what is Blockchain

What is Blockchain technology ? A Step-by-Step Guide

  • 11 January 2021
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What is Blockchain is a question that everyone immediately asks when it comes to digital currency. A blockchain is a method of digital storage of transactions and information. Blocks are pattern and organization that includes exclusive records connecting sequentially together in a single list as a chain.

Several computers on the Internet prove every business deal and add them to the blockchain. The way of recording in Blockchain makes it hard or impossible to change data, or fraud the system.

If you want to know what is Blockchain and its foundation, the base of such a system is a digital ledger of business deals, that can copy and distributed around the whole network of computer systems. Because of peer-to-peer (P2P) properties, it is a Distributed Ledger Technology (DLT). It records information on thousands of nodes in the network.

Its structure allows anyone on the network to look at entries of other users in real-time. That makes it difficult for one user to gain control of the network or manipulate it.

what is Blockchain

What is Blockchain

The history of this technology?

While the computer science community was researching and developing blockchain ideas, the idea of publishing Bitcoin via the Internet and based on blockchain peaked in 2007.

The history of this method shows that it can grow to be a foundation of the systems that keep the worldwide record. However, inventors launched this technology about ten years ago. The history of open-source software goes back 25 years. This platform which has emerged as a real-world technology option since 2016 has revolutionized information technology with open-source software.

Of Course, the technology takes years to achieve maximum productivity with a minimum wasted effort to share information and data among open and private commercial networks.

What is Blockchain Functionality?

Blockchain is a popular electronic ledger based on a P2P system. Different users can openly share and produce many records of transactions. No one can change this information. Every time user can stamp one record and link that to the previous one. Whenever a set of business deals is adding, the data becomes another block in the chain.

The platform can only update by agreement among partners in the system. Once new data is registered into the chain, it cannot be removed ever. It is a technology that one record could be written only once and inserted into the chain. Every record of the transaction can be checked and confirmed.

what is Blockchain

what is Blockchain Functionality

What is Blockchain Security?

Currently, most systems are not safe from hacking; the simple system topology is the safest today. For recording the information of each transaction, the network nodes must first agree that the transaction is valid. The agreement of nodes means that no entity can enter independently and disrupt the transaction in any way.

In the answer to “What is Blockchain” security, we should say that for hacking a network, it is not enough that a hacker only hacks a bank or a system, but he should also hack any of the computers on that network.

As the technology performance became apparent over time, developers came to believe that this system could do more important work than just document transactions.

For example, as explained in “what is blockchain,” the founders of Ethereum had the idea that smart assets and contracts could also benefit from technology management. As a result, Ethereum represents the second generation of such technology.

The biggest innovation created by Ethereum was the appearance of smart contracts. In most cases, two independent existences administer contracts in the mainstream world of business. Sometimes other entities assist in the monitoring process. The system automatically manages Smart contracts.

What is Blockchain in the real world?

A Blockchain is a chain of blocks that include some specific information. There are many applications and innovations of this system. Various types of blockchains depend on the information recorded in a block. For example, a block of a cryptocurrency includes data about the Sender and Receiver (or Buyer and Seller), and the number of coins should be transmitted.

When the question of what is Blockchain became popular among the people, it turned out that it is very useful in many branches of science and technology. One of the most popular uses of such a platform is in financial services.

For instance, the release of Bitcoin through blockchain allows everyone to easily exchange decentralized cryptocurrencies without having to pay a transaction fee and without hacking.

One of the examples of blockchain is in the food industry. Walmart and IBM arranged a supply chain to follow agricultural production from farm to table. The complex network of food industries, from production to supply, ranging from farmers to grocers, tracks foodborne illness. The use of this technology can be transparent and efficient in finding the source of food contamination.

What is blockchain’s structure?

By knowing the different components of blockchain, the structure of this platform can be better understood. A blockchain is a chain of blocks that contain information. The data stored inside a block depends on the type of blockchain

For example, a bitcoin block contains information about the sender, receiver, and the number of transferred bitcoins.

In the discussion of “what is blockchain,” we said genesis block is the first block in the chain . Each new block in the chain is linked to the previous block.

what is Blockchain

what is Blockchain’s structure

What is the meaning of hash in an introduction to blockchain?

A block also has a hash. Hash can be thought of as a unique fingerprint for each block. A hash is a characteristic of a block that specifies all its contents, and will always be unique. So after creating a block, any change inside the block will change the hash.

Therefore, hashes are very useful when you want to detect changes in transactions. If the fingerprint of a block changes, this block will not remain the same as the previous block. Each block simply contains its data, hash, and previous block hash.

To clarify “what is blockchain,” consider this example, when we have a chain of 3 blocks. Block 1 is genesis, so it does not include the previous block. Block 2 contains block 1 hashes, while block 3 contains block 2 hashes.

Hence, all blocks contain hashes from previous blocks. It is a technique that makes a blockchain very secure.

In the introduction to “what is blockchain,” we want to see how it works, suppose an attacker can modify the data in block 2. Likewise, the hashes block changes. However, block 3 still contains block 2 hashes. It causes block 3, and all subsequent blocks to be invalid because their previous block does not have a valid hash. Therefore, changing just one block can quickly invalidate all subsequent blocks.

How do blockchain transactions work?

The following steps are blockchain transactions:

  1. Some people request a deal. The transaction can include cryptocurrency, contracts, records or other information.
  2. Nodes help to distribute the requested transaction to the peer-to-peer network.
  3. The network of nodes verifies the transaction and the status of the user with the help of known algorithms.
  4. After completing the transaction, as we explained in “what is blockchain,” a new block will add to the existing blockchain. In a way that will be permanent and unchangeable.

Why do we need blockchain?

The following are the reasons for the popularity of blockchain technology:

  • Flexibility: In the event of a massive attack on the blockchain system, its structure is such that most nodes still manage the chain.
  • Reliability: In the introduction to blockchain, we see that this technology doubles the identity of stakeholders. It eliminates duplicate records, reduces transaction rates, and speeds up transactions.
  • Security: In “What is blockchain,” we explained that with distributed network technology, each node has a copy of the core technology chain, so even when there are not many nodes, the system still works.

What is a peer-to-peer distributed network?

Blockchains have developed another way to secure themselves, which is to use distributed chips. Instead of using a central entity to manage the system’s chain, they use a distributed peer-to-peer network. So everyone is allowed to join this chain. When a person logs into the network with their computer, they receive a full version of the blockchain. Each connected computer is called a node.

As we said in “What is blockchain,” here we explain what happens when a user creates a new block. This new block will send to all users on the network. Each node must confirm this block to ensure that it does not change. After complete verification and approval, each node adds this block to its blockchain.

what is Blockchain

Peer-to-Peer distributed network

What is blockchain’s wallet?

Blockchain Wallet is the safest and most popular wallet for depositing and storing digital currencies. The first blockchain hardware wallet created in August 2011. Blockchain hardware wallets are small devices that connect to the Internet to conduct cryptocurrency transactions. If you are careful enough to keep these wallets, they are very safe and cannot be easily hacked.

So far, the best and safest wallet on the market is known as the blockchain wallet. As said in “what is blockchain,” there are people all over the world who have bitcoins. That number could rise to 5.9 million, according to a 2017 study by the Cambridge Center on Alternative Monetary Affairs. Now, if one of these people wants to trade his bitcoin, this is where blockchain comes into play. Creating a blockchain wallet is free.

Account setup steps are possible online. After creating a wallet, the system provides its owners with a simple user interface that users can use to communicate with their wallet. This interface use for store, send, and receive payments for Bitcoin and other Altcoins.

What is blockchain’s main point?

Blockchain is a new technology that allows recording information permanently and without the possibility of change.

This technology is a kind of database that is not located on one or more specific servers, but it is distribute on all computers that connect to the network. Registered records cannot be hacked or deleted due to the use of encryption and registration on all network computers.

Bitcoin was the first application of this technology, but we can use this revolutionary system for any system that needs to reduce the need to trust intermediaries and third parties.

As explained in “what is blockchain,” Blockchain has many applications in various industries. Educational institutions, financial institutions, government agencies, and ministries use blockchain to store identity and personal information and data, academic records, work records, and electronic records.

Secure P2P markets will be able to track retail transactions in different markets with product information, shipping, and billing inputs on the blockchain.

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