A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. It stores information electronically in a digital format. They play an important role in cryptocurrency systems, where they maintain a secure and decentralized record of transactions. What makes it different from other technologies is that it gives the guarantee to secure the user’s data, which makes it trustworthy and reliable.
The name was first coined in 1991 in a research project where it was put to application in bitcoins in 2009.
Traditional Database vs Blockchain
The major difference between a traditional database and a blockchain is the way the data is structured. The Blockchain collects information in the form of blocks. When the capacity of a block is full, a new one is added and connected to the previous one. Each block is given a timestamp, due to which it becomes irreversible. It is decentralized, which means all the users control it. On the contrary, a database collects data in the form of tables, which makes it less secure.
How Does a Blockchain Work?
The aim of blockchain is to retain the original digital information without editing which includes alteration, deletion, or destroying it. For this reason, it is called Distributed Ledger Technology (DLT). It is used to create different cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts.
Following are the steps involved in the process:
How is Blockchain Secure?
Due to decentralization, it is trustworthy. As the blocks are linked with a timestamp it makes them difficult to alter the contents of the block. If a hacker wants to do so, he will be unable to do so as his piece will be recognized immediately. The members can cross-check the information, and this distinct copy will be discarded. For instance, if someone is dedicated to hacking, it is not an easy task as the process is very expensive and time taking.