One often comes across the term blockchain technology, but most have little info or clue about what it is actually about.
The term is often used in reference to Bitcoin and other cryptocurrencies.
The technology is a vital component of cryptocurrencies, and without the blockchain technology, it would be impossible for the digital currencies to exist.
How blockchain evolved
The ingenious invention is the work of Satoshi Nakamoto, and a group of people. The blockchain technology has led to the development of a new phase of the internet that is primarily devised for the digital currency or the bitcoin, which is also referred to as the digital gold.
However, the revolutionary technology is now finding other potential uses on the internet.
If one looks back into the history of the blockchain technology, it was a hash tree and known as a Merkle tree. It was Patented by Ralph Merkle, and the data structure was used to verify data between a peer-to-peer network of computers systems and to ensure that no fake data was sent.
The purpose behind it was to maintain the integrity of data shared between computers.
How Does Blockchain technology Work?
Blockchain technology keeps a record of all data exchanges, and every verified data is added as a “block.”
A distributed system is used to verify each transaction that takes place across a peer-to-peer network, and once the transaction has been signed and verified, it gets added to the blockchain and thus cannot be altered.
The cryptographic keys give the unique identity that’s required and these can be Private Key and Public Key. The cryptographic keys define a digital signature and allow one the power of authorizing various actions related to cryptocurrencies.
It is essential to keep both Private Key and Public Key safe. Every transaction gets a unique ID number that is announced to a peer-to-peer network of nodes.
The anonymity of cryptocurrencies is required because the public key is just a randomized set of numbers and letters.
Thus the public key does not tell the real identity of the person behind, and one can generate as many key pairs as they want for their multiple cryptocurrency wallets.
The private key cryptography works as a powerful tool for authentication requirements.
It also safeguards a person from getting exposed to hackers as there is no sharing of personal information. A distributed network of authorization reduces the risk of central corruption and commits to the transaction network’s security.
Authorizing transactions is the core of the blockchain’s protocol that sets and applies the rules. The blockchain technology is indeed a new and powerful way for interactions in the digital world and thus a backbone for a transaction layer for the Internet.
However, like any other technology, the Blockchain technology too has some downsides. To begin with, it has a steep learning curve especially for those without any technical background.
Still, the increasing use and popularity of the technology is compelling many businesses to move the Blockchain into the mainstream and make it more approachable.