An Introduction to Blockchain and its Working

Many of the people have attempted to plunge into this deep concept of blockchain and have observed that it is the evident imaginative invention and is referred to as the backbone of the new internet. It is practically bringing a revolution in the business market globally. Most of us are still unaware of its motive of origin so let’s discuss what blockchain actually is.

What is blockchain?

Blockchain is an open digital ledger that can record transactions between two parties in a provable and durable way. The technology serves as a platform that allows the transfer of digital information without the risk of being copied. But it is not like the other ledgers which we are using for many years to record sales and purchases. If the transaction is once recorded, it can’t be modified subsequently without the variation of all ensuing blocks. This allows the user to verify and audit transactions without much cost. The difference with this technology is who holds the ledger and who verifies the transactions. It has established the foundation of a strong backbone of a new kind of internet space. The technology professionals are keeping on searching for the other abeyant uses of this great invention which can change the entire dealing process in the world. In other words, it is a kind of algorithm and data distribution structure for the authority of electronic cash without the discovery of any centralized administration, programmed to record all the financial transactions as well as value holding things.

It is a concept that ensures the security of data using cryptography and managed by a Peer-to-Peer network. Blockchain is a continuously growing list of records that are linked to each other internally by typically containing a cryptographic hash code of the previous block. With conventional transactions, payment from one person to another involves some kind of emissary to promote the transaction. Suppose a person wants to transfer money to other, so he will either the choose cash method or will use some kind of banking app for the transfer into other’s bank account. Here the bank is the emissary for the verification of transaction of the cash machines as well as digital transfer acting as a ledger.

How does it work?

  • Blockchain works by creating a “ledger” which allows a user to create a transaction with each other with the content of those transactions stored in the new block of each “blockchain” database.

  • Blocks should be encrypted with different algorithms depending on the application creating the transactions. This encryption uses cryptography to tussle the data stored in each new “block”.

  • Soon after the first block has been created, each adjacent block in the ledger uses the hash of the previous block to calculate its own. Before any addition of a new block to the chain, authenticity and uniqueness must be verified. Further, it also includes the permission and affirmation of other blocks that newly added block has been verified. This process of validation also guarantees that all copies of distributed ledger share the same state.

  • Due to this system of adding hash code and checks, the newly added block can be referenced in successive blocks but can’t be changed. If someone attempts to swap out or hamper a block, the hashes of previous and successive blocks will also get changed and rattle the ledger’s shared state. Whenever such kind of situation occurs, another computer in the network will be aware that an issue has occurred and further no new blocks will be added to the chain until the problem gets resolved. Next, the block which is causing error will be discarded and the whole process of validation gets repeated.

  • Information that is stored on a blockchain is a shared sheet whose data is accustomed from time to time. Blockchain data does not exist in one single place and everything stored in there is open for public view and verification. Moreover, there is not any centralized information storing platform exists which can be hacked. It is practically accessed over a million computing systems side-by-side and its data can be consulted by any individual.

  • Ledger is distributed across a vast network of computers referred to as nodes each of which holds a copy of the entire ledger on their respective hard drives. The nodes are connected to each other via a piece of software known as peer-to-peer (P2P) client, which synchronizes the data across the network of nodes. When a new transaction is entered, it is first encrypted using cryptographic technology. After encryption, the transaction is converted into a block which is a term used for an encrypted group of new transactions. The block is sent to the network of computer nodes where it is verified by the nodes and after the verification, passed through the network so that block can be added to the end of the ledger on every computer under the list of all previous blocks.

Uses

With CRM software, Blockchain can add exciting data security features. The integration of both enables the organization to have verified records which are secured by Blockchain technology. Blockchain restricts the duplicate or risky data from hampering the database and so it speed-up CRM processes and ensures customer satisfaction. There is not any particular rule who can or can’t use this technology. At present, the potential users of this invention are banks, supply chain, cloud storage, commercial giants, healthcare, social networking, and global economies and many more; the technology is open for the day to day transactions of the general public as well.

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