Blockchain tech is one of the foremost innovations of the present century. Made to support bitcoin, the blockchains power thousands of cryptos, and developers work to integrate the tech in finance, art, medicine, and businesses. In order to know about the increasing interest, it’s helpful to get an idea about how blockchain functions, why it holds value, and what are its differences from any other internet tech.
Understanding the definition of blockchain
A blockchain happens to be a digital transaction ledger maintained by a computer network in the way that makes it hard to alter or hack. This tech offers a safer way for the individuals to directly deal with one another, minus an intermediary like banks, government, or other third parties.
The ever-growing list of records, known as blocks, get linked together through cryptography. Every transaction gets independently verified through computer networks. They are time-stamped and included in a growing data chain. The data can’t be altered after its recorded.
Though the growing usage of bitcoins, Ethereum, and other altcoins has popularized blockchain, the technology has widespread application for medical records, property sales, legal contracts, and other industries that need authorization and recording a series of transactions or actions.
Explaining the working process of blockchain
Let’s use bitcoins as an example to understand how blockchain functions:
- Buying and selling bitcoins gets entered and transmitted through nodes, which are a network of powerhouse computers.
- There are networks of thousands of nodes all over the world ton confirm transactions through computer algorithms. It is called bitcoin mining. Moreover, the miner who is the first to successfully complete a block gets rewarded with bitcoins for the work. The rewards are a combination of network fees and freshly minted bitcoins. The network fees are passed down to the sellers and buyers. The fees tend to fluctuate based on transaction volume.
- After cryptographically confirming the purchase, the sales are added to blocks on distributed ledgers. Then, most of the network can confirm the sales. This block gets permanently chained to those earlier blocks of bitcoin transactions through the cryptographic fingerprint called a hash. The sale is finally processed.
The idea of blockchain tech first came up in the academic papers in 1982, in the dissertation that discussed the designs of distributed computer systems that mutually suspicious groups can establish, maintain, and trust. Finally, a 2008 dissertation paper published under the pseudonym Satoshi Nakamoto, called ‘Bitcoin: A Peer-to-Peer Electronic Cash System,’ brought academic theories into real-world usage.
Looking ahead at the future
Though bitcoin systems are the best-known uses of blockchain tech, thousands of cryptos are made based on this developing technology. Though it is yet to be seen whether bitcoin will be successful in moving past the other types of conventional payment methods, the use of blockchain tech is steadily growing. In fact, the experts at leading platforms like Bitcoin X opine that blockchain tech is all set to dramatically change different industries. Thus, the future is bright for blockchain technology.