The revolutionary blockchain technology that created buzz in the market is expected to disrupt the tech-space forever. Founded by Satoshi Nakamoto, blockchain has been an undeniably ingenious invention that eliminated the humongous need of record keeping and even saved billions of money. Since its inception, blockchain technology has evolved into something really enormous, massive and colossal.
This technology is a new type of internet in itself that allows digital information to be shared and distributed among the users. It was originally created for making payments simpler, but today, developers in crypto space are looking for more potential uses of this technology.
What is Block in Blockchain technology?
In a blockchain, every block is comprised of data, hash and hash of previous blocks. The data stored inside the block depends on the type of blockchain. For instance, a bitcoin block will incorporate the details of the transaction like sender, receiver and the amount. The hash is similar to a fingerprint that identifies the block and its content. A hash is always unique and is very useful in tracking changes in the block. Hash of previous block helps create an effective chain of block and this technique makes a blockchain secure.
Nodes are the computer connected to the blockchain network that validate the transactions and authenticate transaction data and block data. They provide a consensus about the state of a transaction at any given point. All the nodes in a network have the copies of the existing authenticated ledger, which is distributed amongst them.
When a new transaction is made or any changes are done to an existing one, all the nodes execute some algorithm on it, so as to evaluate and verify the history of the individual blockchain. All the nodes come to a consensus that the history and signature is valid, which allows the new transaction to get accepted in the ledger and new block is added to the chain. Such an eco-system within the network makes the embedded data more transparent and incorruptible. Technically, it would require huge amount of computing power for overriding the whole network.
Why is it called Distributed Ledger?
Distributed ledger is a consensus of shared, duplicated and synchronised digital data that is spread across multiple nodes, which creates more robust & secure environment for real-time data sharing. Although Bitcoin blockchain is considered to be one of the popular distributed ledgers, many other platforms like Ripple, Multichain and HyperLedger project also use Digital Ledger technology.
Blockchain is a type of digital ledger that comprises unchangeable, digitally recorded data in packets called blocks. It has the potential to be programmed for recording financial transactions. It is like a spreadsheet that can be replicated multiple times across a network of computers and is regularly updated by the network.
The blocks of information stored on a blockchain are identical across the network and therefore it cannot be controlled by single entity and there are no chances of failure. Since its beginning in 2008, there have been no significant disruptions reported. So, if you are worried that it might get hacked or tampered, then you must know that there is no centralised version of it.
What if Blockchain could work like Google Docs?
In Google docs, people can access the same document at the same time, which means single version of the document is visible to everyone. Blockchain also works like a shared ledger, but is actually a shared document.
So, if there are huge numbers of legal documents that need to be seen by multiple people. Instead of passing these documents to different people and creating different versions of it, with a fear of not being in sync with the latest version, all the documents can be shared. However, blockchain is not required for sharing documents, but shared documents analogy can be of a great help.
Blockchain technology has truly brought everyone to high degrees of accountability, with absolutely no missed transactions and machine errors. In near future, this technology will incorporate immensely valuable things that we can just dream of.