In this digital era, a new distributed ledger technology was introduced. The technology is named as blockchain technology. It is a fixed and shared ledger that assists in tracking all the assists while recording the transactions. Regardless of complexity, technology is quite secure.
Understanding the concept
The concept of blockchain technology can be easily explained by the example of Google Docs. In Docs, a newly created document can be shared with people. The person sharing the documents holds all the rights i.e. editing and viewing. The process is quite simple yet stable. The shared document is evenly distributed. Rather than creating the copies upon sharing, the documents stay in its actual form. A decentralized network chain is created granting them equal rights to all the people who can access the document at the same time. They can make modifications and these changes are being recorded in real-time. In the same way, blockchain works.
Explaining the process
The blockchains operate through a system of currency called bitcoin. These bit-coin transactions are recorded similarly like a business. However, in the case of the blockchain, the ledger created and the transactions recorded are digital. With the new scheme being introduced and names as a bitcoin revolution, you could earn thousands of dollars in a single day.
The whole technology circulates the three basic concepts which are blocks, miners, and nodes.
The chains include certain small units called blocks. The information is stored in these blocks. The block is further divided into three components. Data, nonce, and hash are the three components. A nonce is a 32-bit number that is generated when a block is created and is followed by a 256-bit number called as the hash. The hash is embedded in the nonce.
The process to create new blocks is called mining and the function is performed by miners. The mining process can be long and complex if the chains are large. It is since every single block has a unique identity i.e. hash and nonce. In addition to this, these blocks store the information of the previous blocks as well. The second main issue is that if any change is to be made to any block, the whole mining process has to be repeated.
To keep the proper functioning of the blockchain, nodes come in to play. They maintain all the copies of the blockchains. These nodes are in connection with the chain and usually are some electronic devices. A single node owns a copy of the blockchain.
The technology is improving day by day. New areas are being explored where blockchain can be applied. The potential users are also increasing. The technology is currently being used in the supply chain, identity management, and in making payments across the borders without a single trace.
The bottom line is that the blockchain technology is the future because it reduces all the risk and prevents fraudulent activities from happening. Secondly, the process is transparent. Companies are switching their old and traditional ledger maintaining ways and shifting towards the blockchain technology.