Blockchain is a system of connected databases, it is a wide network in which multiple thousand computers are interconnected with each other. These databases are called nodes which make up a chain of nodes called Blockchain.
It is used in most modern-day applications such as Cryptocurrency, IoTs, Anti-money Laundering tracking systems, supply chain logistic services, and several other digital platforms.
With more than hundreds of uses, blockchain technology is advancing with time, as the most progressive technology which can be used to secure the future of the digital world. Statistics show that the world is spending heavily on blockchain technology with more than $6.6 billion spent globally in 2021.
What is Blockchain?
As discussed, blockchain is a complex mesh of multiple databases. People might wonder, “why does it differ from a typical database?” Well, the databases are used to store data which can be used to process information in a digital format while a blockchain system stores information that is shared across several digital systems through secure means of encryption i.e. cryptography.
Secure ways of encryption ensure the protection of data every step of the way. Cryptography is a multi-level protection technique by which different sorts of data are secured online. Any type of data can be preserved in a blockchain. In today’s world transactions ledgers are stored mostly in blockchain systems to enhance financial security and kyc authentication is super secure in making them more safe from any fraud.
How did Blockchain come into existence?
The concept of a blockchain system was first introduced in 1982 when cryptographer David Chaum first introduced a blockchain-like protocol. Later the definition of a block was introduced to the digital world by Haber, Stornetta, and Dave Bayer in 1992.
Later in 2008, Satoshi Nakamoto introduced the whole concept of the Blockchain system as the first decentralized blockchain system was developed to manage data usually generated by cryptocurrencies.
How does Blockchain Work?
The main aim of a blockchain system is to prevent data misuse. It is used to store and create new data but once the data is stored in a blockchain system it cannot be modified or edited. Blockchain is the foundation of immutable technology which prevents deletion and alteration of data. The transaction system which many industries rely on is based on Blockchain technology, it is called Distributed Ledger Technology (DLT).
Data is created and stored in the form of a block, it is chained to several blocks of information. Once a new sort of data is generated it is inserted into a fresh block. The newly created block is then chained to previous blocks of data to store the data in chronological order.
Data Enters the Chain
Data from different transactions are generated to enter the system. For e.g. A new cryptocurrency transaction is processed by the user
Data is Transmitted
The data is then transmitted to a block of data in the different chains of peer-to-peer blocks which are mostly computer systems spread across the globe. These nodes make up a blockchain system.
After the block is created a complex computational problem is solved by the system to verify the validity of the data i.e. transaction in our example.
Clustered into Blocks
The block of data is clustered with other chains of blocks in chronological order after the validation process. This ensures the generation of a new block into a blockchain system.
Chaining of Blocks
After successful clustering of a new block, the Block is then chained to different sets of blocks which creates a permanent entry of the new block into the blockchain.
Industries that Use BlockChain
With the increase in demand for digital products such as cryptocurrencies and Non Fungible tokens, many industries are contributing to the blockchain system. Blockchain provides a secure platform to process data efficiently and securely.
The Security sector also contributes to the blockchain system by providing a complete operation over the money laundering activities in the digital world. Many organizations use blockchains to analyze the data for processing the loopholes in the digital system. AML and other security principles like KYC verification are incorporated with blockchains to protect the community and their transactions.
The tech industry is a main performer in the blockchain system, Major tech industries are developing their own blockchain systems to track their transactions for e.g IBM introduced its food blockchain to manage food requirements at different locations.
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Blockchain is a system of several centralized and decentralized repositories that are used by various industries in the digital world. It is a complex chain of blocks of permanent data that is secured by the means of cryptography. This method of encryption in the blockchain provides a secure data generation platform to manage different transactions online. The cryptocurrency transaction system was among the first to utilize blockchain technology.