Blockchain is literally just a chain of blocks. The words “block” and “chain” in this context are actually talking about digital information (block), that is stored in a public database (chain). These Blocks are made up of little pieces of “digital information”, having three parts: one part stores information about any transaction, another part stores the information about the participants of that transaction and the other part stores information that helps to distinguish one block from another.
Blockchain presents a new example for establishing and recording a reliable interaction. Blockchain technology accounts for the issues of security and trust in several ways. First, new blocks are stored linearly and chronologically, i.e., they are always being added to the “end” of the previous block. After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of that block. That’s because each block contains its own “hash”. Hash codes are created by a math function that turns the digital information into a string of numbers and letters. If that information is edited in any way, the hash code changes as well. Since blockchain as a technology is decentralized in nature, it does not rely on one central point of control. It is a digital ledger of transactions with every computer having a complete copy of the data. This blockchain technology has created the mainstay of the new and updated type of internet, it allows the digital information to be distributed but not copied. As an example, one can think about the Google Doc, when we share with someone, the docs get distributed among them, not copied or moved.
Importance
Most businesses are moving towards blockchain to improve their business models, payment methods and cloud storage, etc. The importance and impact of blockchain technology and decentralization are as follows,
Security Purpose:- There are plenty of hackers available in the digital world who always try to steal data from sources. With Blockchain technology the information storage is strongly secured, and made it impossible for one to hack.
It is Inexpensive:- Most of the traditional financial models that are available in the market are expensive. However, blockchain is much inexpensive than those.
It is Decentralized:- The blockchain is not owned by any single entity, or person or system. So it is decentralized, which prevents hackers to hack from a particular location, as it is easily accessible by anyone.
Increased Financial Efficiency:- Decentralized blockchain allows one to make transactions from one individual to other individual without the involvement of any third party. This saves a lot of money while making transactions, unlike traditional banks.
No Transaction Cost:- The blockchain carries no transaction costs, only a little infrastructure cost is payable. It is a simple and generous way to pass information from a person to another person in a fully automated way, which is safe. For example, you can take the railway ticket booking system over any application or web using a credit card. It takes an amount like a card processing fee or transaction fee, which can be saved by using the blockchain.
Transparency:- The blockchain is a transparent way that one easily tracks the data if they want to.
Immutability of Data:- The blockchain is immutable, hence no person or system can change or destroy or tamper the data that already is inside the blockchain.
How Blockchain works
This blockchain is an unbribable digital ledger of economic transactions, which can be programmed for financial transactions not to be recorded only, but also keeping all of them virtually. In simple terms, the blockchain technology is an on-time series of unchangeable data records, which can be managed by a bunch of computers, it is not owned by any single person or system.
Blockchain technology is an open distributed ledger that can record transactions of two parties securely and efficiently as it is distributed. Blockchain is typically managed by a peer-to-peer network, working simultaneously together to solve complex mathematical problems in order to validate new blocks. Once recorded, the data in any given block cannot be updated retroactively without changing all subsequent blocks, which requires the confirmation of the majority in the network. This is the main reason why blockchain technology is secure and not easy to hacking.
One can initiate a transaction by making a block, which will be verified by multiple computers that present over the net. Then the verified blocks got added to a chain, which is already stored across the net, creating a unique record with a unique history. For example, let’s take a railway ticket booking. The passenger initiates the transaction by confirming the ticket. The ticket is the block here, which got added to a ticket blockchain by verifying with the present systems associated with the railways. Whenever the final ticket will be set, it will contain not only the unique record like passenger name or train number but also includes a unique history like the train route, the train journey, etc.
No data-security technology is as tested as blockchain since it protects one of the largest public storage of economic value in human history: Bitcoin. But Bitcoin’s blockchain is very specific to its purpose and would need to be more flexible, more private, and faster in order to be used by organizations that focused on data security. But much of the worlds’ data that requires protection is in files, documents, images, and videos. A security-focused blockchain must be able to store anything.
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