What is Blockchain Technology ? | How Does Blockchain Work ?
Friends, you must have heard the name of Blockchain Technology in the world of share market. But have you tried to know the benefits, what is this Blockchain Technology and how does Blockchain Technology work, etc. do this article
What is Blockchain Technology ?
Just as a ledger is kept to keep an account of the transactions in the business, similarly the account of the transactions of Cryptocurrency on the Internet is handled by Blockchain. Blockchain is a kind of Distributed Digital Ledger in which any kind of data can be stored (yes, you heard right, any kind of data).
At present it is used like Cryptocurrency, NFTs and DeFi Smart Contracts. Things are being used to store data. Now you may think that data can be stored in many ways, so why the need for blockchain is a good question.
Actually, there is a small difference between storing the data in the old traditional way and doing so with the help of blockchain and the difference is that in the traditional way the data is centralized i.e.
Stored in one place which the database administration wants as per their wish. Can easily change anytime. Such as the data of your bank account, your bank can easily change it. Whereas in contrast, in blockchain technology, the data is not just in one place but is available (in the form of a copy) to every person who needs it.
It is called Decentralized Database. Every computer in which a copy of the data is present is called NODE. Blockchain makes your data extremely secure so that it cannot be unnecessarily tampered with.
How Does Blockchain Work
Just as a ledger is made up of many pages, the blockchain is also made up of many different “blocks of data”. It is named blockchain because when blocks of data come together they form a chain. With the advent of blockchain technology, there will be no need for the intermediate things that you handle with the database (eg banks).
The way blockchain technology works is quite different from older technology. If we look at the old technology, then any person in the data, who has the right of admin, can make any desired changes in the data. For example, your bank may show the balance of your account as ZERO at any time, as it has the right to make changes in its database.
On the other hand, if a new transaction (ie block) has to be added to the blockchain or a person wants to make changes in it, then to do so first he has to get permission from all the users of that blockchain (called NODES) and if Majority ie more than 50% nodes,
Get permission then it gets changed and if such situation is not created then that change gets rejected. Blockchain is also very secure because every node has to solve complex mathematical problems in order to process the transaction.
Types of Blockchain
Two types of Blockchains
1) Public Blockchains :- These are such blockchains in which any person can participate and read, write or audit the data. No authority controls such a blockchain, so it is not possible to alter the transactions in them.
2) Private Blockchains :- These blockchains are controlled by an authority or group and can be changed by a select few. Also, the option to re-alter the changes made is also present in it. These can be treated like an in-house database of a company which is distributed over just a few nodes.
Uses of Blockchain
cryptocurrency :- Blockchain is currently being used the most in cryptocurrencies (eg- Bitcoin). Blockchain is also being called the backbone of crypto. As people buy, exchange or spend cryptocurrencies, blocks are added to the blockchain so that the blockchain gets spread.
Assets Transfer :- Nowadays digital assets (like NFTs) are very much in trend. All the work of recording and transferring them is also done through Blockchain.
Banking :- Apart from cryptos, blockchain technology is also being used in banking systems. Nowadays, even in transactions of official currencies (eg- Dollar, Rupees), blockchain technology is being given priority instead of banks. Because one is more fast and the other is very secure.
Smarts Contracts :- With the help of blockchain, such smart contracts can also be created which are self-executed. For example, payment is released only when the goods have arrived, such technically smart contracts are also being created with the help of blockchain.
Supply Chain Monitoring :- When goods are supplied on a large scale, it is very difficult to know at which point or at which vendor the problem is coming. With the help of blockchain, it becomes very easy to trace the source of problem. IBM’s FOOD TRUST is one such monitoring system that completely tracks the supply of food from harvesting to consumption.
Voting :- The use of blockchain technology in voting is also being worked on on a large scale and it is expected to be implemented on a large scale soon.
[ Conclusion ]
I hope that you have liked this article of mine very much and with the help of this article, you must have got information about What is Blockchain Technology. In this article, we have tried to tell you about every information related to blockchain technology using the simplest language possible.