What is Blockchain Technology?

 If you know about cryptocurrency, you might definitely have heard about blockchain technology. This is because blockchain technology plays an important role in the secure operation of digital currencies. Blockchain technology has been used in cryptocurrency for over a decade now, and other industries also started using this technology. This shows that blockchain is such an advanced and powerful technology that we all need to understand. Read on to understand the basics of blockchain technology. 

What is blockchain in simple terms?

In simple words, a blockchain is a shared ledger or database. Pieces of data are added in data structures called blocks, and every node of the network has an exact replica of the whole database. Safety is ensured as if somebody tries to delete or edit an entry in one copy of the ledger, the majority won’t reflect this transformation and it will be rejected.

Blockchain technology makes transactions highly safe and secure which is not possible with other technologies. This is the major reason why blockchain is used in the crypto market. Cryptocurrency transactions are faster, smoother, trusted, reliable, and transparent because of blockchain technology. 

How does it work?

The purpose of blockchain is to enable virtual details to be added and distributed without editing. In this way, blockchain is the foundation for records of transactions or immutable ledgers that cannot be changed, destroyed, or deleted. This is the major reason blockchain is called distributed ledger technology. 

Blockchain is used for safe and secure transactions and that is why it makes crypto transactions smooth and secure. This technology works in a highly secure way. Thus, other industries along with cryptocurrency industries have started accepting this technology to become trusted and reliable. 

What are its advantages?

Advantages of blockchain technology include:

Accuracy of the chain

As there is no involvement of humans in the verification process. Thus, blockchain improves accuracy. Transactions on blockchain networks are approved by the network of numerous computers. This is how it eliminates human involvement in the process, resulting in an accurate record of details. 

Even if any computer on the network were to make computational errors, the mistake would be made to one copy of the blockchain. This way the error would only occur in one block which can be corrected easily. Thus, blockchain technology improves the accuracy of the chain. This is one of the major benefits of blockchain technology. 

Budget-friendly

Typically, people pay their banks to verify transactions. Blockchain eradicates the requirement for intermediary verification—and, with it, their connected costs. For instance, business owners incur a small fee whenever they embrace payments with credit cards, as banks and payment-processing organisations are supposed to process those transactions. Bitcoin, on the contrary, does not have a central authority and it has limited transaction charges. Lower cost is one of the reasons large industries throughout the globe are accepting blockchain. Blockchain gives maximum benefits at lower prices and this is what makes it unique and liked by everyone. 

Private transactions

Various blockchain networks work as public databases, meaning that anyone with a good Internet connection can see a list of the transaction history of the network. Users can access information about transactions, but they cannot access identifying information about the users making those transactions. It's a very common misperception that blockchain networks like bitcoin (BTC) are anonymous when in reality they are confidential. 

When a person makes a public transaction, their unique code known as a public key is added to the blockchain. Their personal details are not. If an individual has made a BTC purchase on an exchange that needs identification, then the individual’s identity is still connected to their blockchain address but a transaction tied to a person’s name doesn’t disclose any personal details.

Transparency

Most blockchains are completely open-source software, meaning that anyone can see its code. This provides auditors the ability to review virtual currencies like Bitcoin for safety. This also means, there is no authority who rules Bitcoin’s code. Due to this, anyone can recommend transformations and upgrade to the system. Transparency is the best feature of blockchain that we all need to understand. You get the best transparency with blockchain which is not possible with other technologies.

 

Stay tuned to know more about the world of cryptocurrency and blockchain technology.