Blockchain technology is a chain of records, chronologically linked via blocks of data. This technology empowers the creation of a decentralised ecosystem, where the cryptographically approved exchanges and accurate information are not under the bureaucratic control of any outside association. Every transaction is registered in a permanent record which is a reliable, secure, straightforward and perpetual chain, adhering to time and numerous other legitimate elements. The blockchain term was first used in 2009, by (the still obscure) Satoshi Nakamoto, in the first source code for the virtual cash Bitcoin:
“Nodes collect new transactions into a block, hash them into a hash tree”; “when they solve the proof-of-work, they broadcast the block to everyone, and the block is added to the blockchain” (Nakamoto, 2009).
Understanding the factors typical to the blockchain systems, there is:
- A repository for storing massive volumes of data, primarily the financial data
- Real-time data creation and replication across networks
- Peer-to-peer network, no traditional client-server model or third party involvement
- Multi-authentication procedures and the digital signature requirement for advanced security and ID authentication; leveraging cryptography to its maximum potential
- Impregnable data record distortion, and security updates on any individual attempting to do so
Blockchains vary extensively in architecture and functionality, primarily on the principles of being either a public or a private network. Developers create defences and security measures that are very different from each other, all depending on the kind of system it is building. Blockchain networks utilise security protocols depending on the users’ ability to write or enter data to them (public or permissionless blockchains) or if the users’ pool is bound by some requirements for accessibility (private or restricted blockchains). This purpose of the blockchain is very critical to the creation of the network and affects the engineering of the entire system. However, ironically public blockchain networks are much more constrained concerning data entry and changes when compared to private blockchain networks.
How It Works
The users’ pool needs to install and run a particular software that connects the user’s server to the network, creating network nodes. After the installation, the software will download the entire blockchain database onto that user’s server.
These newly created nodes act as the entry points for the new data, validating and propagating into the blockchain database.
The users are the ones that validate every transaction based on the database protocol, i.e. pre-agreed rules to confirm and determine that data, administered by the software.
A block is generated when these transactions are connected, which are then affixed in chronological sequence or a chain; hence the term blockchain.
Blockchain technology is not rocket since and masses can utilise it in various ways. Therefore, every industry and vertical is now trying to implement blockchain into the business framework. Analysts and developers regard the future for blockchain technology as the game changer to every industry domain.