What is Blockchain Technology?
A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
Originally developed as the accounting method for the virtual currency Bitcoin, blockchains – which use what’s known as distributed ledger technology (DLT) – are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralized authority.
A block is the ‘current’ part of a blockchain, which records some or all of the recent transactions. Once completed, a block goes into the blockchain as a permanent database. Each time a block gets completed, a new one is generated. There is a countless number of such blocks in the blockchain, connected to each other (like links in a chain) in proper linear, chronological order. Every block contains a hash of the previous block. The blockchain has complete information about different user addresses and their balances right from the genesis block to the most recently completed block.
The Benefits of Blockchain Technology:
Blockchain technology offers a slew of benefits beyond cryptocurrency. Consider the way businesses keep data safe today: They typically strive to put up a wall around their data and secure it that way. Data is vulnerable – a variety of internal sources can touch the data and manipulate it, and cybersecurity continues to be a growing concern in general.
Therein lies the appeal of blockchain. Transactions that occur within blockchain can’t be changed once they’re written – that is unless the majority or all of the computers in the blockchain give the go-ahead. This cuts the risk of backdoor transactions and significantly reduces the risk of security breaches. But it’s not just the financial sector that has something to gain from this technology. Industries such as healthcare, law, government and defense are currently strategizing ways to leverage this technology to create ways to protect data and automate safe data sharing.