Blockchain is anot really an unknown term these days considering the growing excitement aroundcryptocurrencies.When we talkabout blockchain, some of you might relate it to Bitcoin. But it is importantto understand that Bitcoin and Blockchain aren’t the same thing, infact,Blockchain is a technology behind the very famous digital currency, Bitcoin.But is that allto blockchain? The answer tothis is, No.
The prospective use of Blockchain is way beyond just cryptocurrencies.So what exactlyis Blockchain? What is so exciting about this technology that everyone iscurious to explore it?What is Blockchain?In Wikipedia,Blockchain is defined as a continuously growing lists of blocks that are linkedand secured using cryptography. Each of these blocks contains a hash pointer, alink to the previous block, transaction data and timestamp.
It is an opendistributed ledger that records transaction details between two partiesefficiently in an verifiable and permanent way.Blockchain isbasically a persistent, transparent, public, append only ledger.It is a systemthat you can add data to and not change any previous data within it. The dataadded previously, would remain intact. It does this through a mechanism forcreating consensus between scattered or distributed parties that do not need totrust each other, but trust the mechanism by which their consensus has arrivedat. Currently, if weneed to make a transaction, most of us use a trusted middle party which isusually a bank. Let’s take anexample where user A needs to transfer some amount to user B. User A would usea third trusted middle party to do the transfer successfully to user B.
Thetrusted middle part would do the transfer successfully, however would chargesome amount and the transaction time would usually take an hour or so. Blockchainattempts to solve 3 things here:1. Totransfer money without the trusted middle party, thereby enabling people to connectdirectly with each other.2.
To transfermoney faster than the traditional system. In fact, it would be transferredinstantly or within a few minutes/seconds.3. To dothe transfer work done cheaper than what the trusted middle party collects. Blockchain workson the fundamental of distributed and open ledger. Whenever a newblock is added to the blockchain, it is shared with each node on thepeer-to-peer network and every node would verify the authenticity of the blockand arrive at a consensus post which each node would add this block to theirblockchain. Since it is decentralized, we can say that there is no central hubwhere the transaction data is stored.
The entire transaction details in theblockchain is retained on the entire network, thereby ensuring the history isnot in control of one person. This ensures complete security.In case of thetraditional system, one trusted middle party would be ensuring the authenticityof a data, just like a centralized ledger.