Blockchain Technology: a simple guide for dummies


Blockchain technology is one of the most popular technical discoveries of the modern information technology industry. This is a short article, a dummies' guide explaining the different aspects of the blockchain technology.

The modern world is governed by technology and the technology remains in a state of constant flux. It is quite common to hear about a technology today and have a new one take its place within a few weeks. The latest buzz in the technical world is about Blockchain Technology. Considering the fact that this is a blockchain for dummies guide, we'll stick with basic concepts and offer a high-level idea of blockchain security and its basic concepts.

Blockchain for Dummies: What is Blockchain Technology?

In simple words, blockchain is a distributed public ledger of information which is secured using cryptography and it operates through consensus mechanisms such as Proof of Work (PoW) or Proof or Stake (PoS). Imagine a network of thousands of computers with every computer having the same copy of a database and any change within this database must be approved by multiple nodes operating within the network (Miners).

Blockchain Technology
Source: https://pixabay.com/en/blockchain-cryptocurrency-network-3277335/

The distributed nature of the blockchain offers maximum transparency to the network participants. Additionally, the blockchain operates through hundreds of miners (limited in some blockchains), hence, no single authority can manipulate user data or choices.

Let's find out some important features of the blockchain technology-

Blockchain Explained: Key Elements of Blockchain Technology

Blockchain: A distributed public ledger of data holding the record of every single transaction that has ever happened within the network.
Bitcoin: Bitcoin is a digital currency built using blockchain technology. It was the first successful implementation of the blockchain in a cryptocurrency.
Block: Block is the building unit of blockchains as in a blockchain is a logical sequence of blocks. Each block contains multiple transactions and its size may vary from one blockchain to another. For instance, the block size in Bitcoin blockchain is set to 1 MB.
Mining: Mining is the process of adding verified transactions to the blockchain. It requires miners to solve complex mathematical problems to prove the validity of the underlying transactions of a block. Miners are rewarded to solve these blocks either with a transaction fee or a set block reward.
Nodes: Node represents independent computers in the blockchain network. It is important to know that each of these computers keeps a synchronised copy of the blockchain, enforcing transparency throughout the platform.
Smart Contract: A smart contract is a code written on a blockchain that performs a specific task or logical operation automatically once signed. Users can create smart contracts for simple as well as complicated tasks.
Address: To simplify it, an address is a unique array of alphanumeric symbols and it identifies a digital location for storing and sending/receiving cryptocurrencies. It acts similar to a bank account in a manner that one could store cryptocurrencies and even share it with others to receive digital funds.

What Makes Blockchain Technology Different



Distributed Network
Source: https://pixabay.com/en/bitcoin-cryptocurrency-money-3012035/

Decentralised with no central controlling authority: Unlike traditional platforms/technologies, blockchain technology doesn't have a controlling authority, which results in higher transparency and trust. No single corporation can manipulate the users' data and sell it without prior notice.
No single point of failure: Since blockchain consists of multiple nodes spread within a network, it doesn't have a single point of failure, making it highly secure and tough to breach. Even if a node is corrupted, other nodes can quickly identify that and resolve the issue.
Trustless operations: Blockchain technology uses a consensus mechanism to approve transactions. Every super node or miner has vested financial interests in the smooth operation of the blockchain. Hence, the entire blockchain operates in a trustless manner, provided all the participants perform their duties as per expectations.
Highly secure: Blockchain technology uses cryptography to encrypt the transactions/blocks of data, which makes it immune to security breaches. It operates through a public-private key model under which only the authorised private key holder can decode the data and make sense out of it.
Higher scope of implementation: Blockchain technology can be implemented in multiple industries. We have already witnessed its successful implementation in the financial and retail industry. Furthermore, core industries such as transportation and manufacturing are experimenting with Blockchain development to improve their operational efficiency.

Conclusion

Blockchain technology is revolutionary in itself, and its easy integration with various industries is likely to encourage massive adoption in the upcoming years.


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