An advanced database known as Blockchain technology enables to share the information within a business network. Data is kept in blocks that are connected together in a chain and stored in a blockchain database. Blockchain is a system for storing data in a way that makes system changes, hacking, and cheating difficult or impossible. In this article, we will share the history, functions, and four key features of Blockchain.
What is Blockchain?
Blockchain is a distributed, unchangeable ledger that keeps track of assets and records transactions in a corporate network. An asset may be tangible (such as a home, car, money, or land) or intangible (intellectual property, patents, copyrights, branding). On a blockchain network, practically anything of value may be recorded and traded, lowering risk and increasing cost efficiency for all parties.
Importance of Blockchain
Information in a business is very important. Accuracy and speed are crucial for the business process. Blockchain is the perfect solution for all as it delivers and shares information immediately with transparency. It is stored on an immutable ledger that has accessibility to the permissioned network members only. It can also track orders, payments, accounts, and production. The details of the transactions can be viewed along with opportunities.
How does the Blockchain work?
Blockchain as the name suggests works in the form of blocks. Here is the detail of how it works.
- The transactions occur in the form of blocks. The movement of the transaction is tracked whether it is for tangible or non-tangible means. The blocks also record the information (who, what, when, where, and how much)
- The data blocks form a chain as the transactions move from place to place and the owners as well. The blocks share the exact time and sequence, and the block links securely join together without the blocks being altered.
- The transactions cannot be reversed. The blocks have strong links with the existing block and the entire block. This lowers the risk of tempering hence there is no mutation. The ledger build is trustworthy.
Key Features of Blockchain
There are four main features of the blockchain on which it is built.
Publicly Distributed ledger
The blockchain believes in transparency where the participants have access to all the transactions. It is known as a publicly distributed Ledger, as it has data that is shared, synchronized, and replicated around the world. The transactions are recorded once which helps in eliminating data tampering. If in case, there is some alteration, everyone can see the alteration.
Cryptography is used to secure data in the blocks. The blockchain uses SHA-256 for encryption, which is the strongest hash function. It generates a unique 256-bit signature for a text. The digital signatures are used for validation. Two keys (public and private ) are allotted to each user. The public key is for the identification of the user, whereas the private key gives the user access to the account. The sender’s message is processed through a hash function. Whereas the output is received through a digital signature using the private key. To get a hash value, the message is passed through a cryptographic function. The hash value is then compared with the hash output obtained by bypassing the digital signature and public key through a verification function.
Proof of Work
It is a piece of data in which the nonce value of a block is found by solving a mathematical puzzle. It is very hard to produce as it takes time and money. The miner finding a lesser value than the target value is awarded 12.5 bitcoins, which is added as a block. Every four years, the amount of bitcoins a miner earns is reduced to half, so that the market is controlled and limited bitcoins are mined.
Miners are the people who mine bitcoin. They are awarded bitcoins if they find the exact nonce value. The bitcoins are reduced to half after every four years. They get the sum of all transactions for a particular block.