Blockchain: What is it and How Does It Work?

04:44 AM UTC+8, 01 Nov 2018
1080
Blockchain: What is it and How Does It Work?

Blockchain: What is it and How Does It Work?

Published 04:44 AM UTC+8, 01 Nov 2018
1080

Piggyback to the 1900s when the internet was just a bunch of dots or computers that could hardly transfer a couple of bytes simultaneously. Now, you can conveniently use the internet from anywhere you are, without even a wire being connected to your device. For that to have happened, there was a paradigm shift.

The thing about paradigms is that you never know what they did when they were invented, or why they were created in the first place. We need the foresight to understand what this paradigm does for everyone truly. That foresight is what we need with the Blockchain technology.


That said, What is Blockchain?

Long before banks and banking services were introduced, a lot of people were already involved in the payment for products and services. When banks were introduced, it was seen a streamlined way of carrying out transactions. But that wasn’t enough! Well, blockchain came to change that.

A simple way to see Blockchain is as a form of technology that allows the secure, transparent, and fast exchange of digital currencies and properties in a decentralized way with the use of cryptography.

A blockchain is a block of data that represents an entry in a financial ledger, or records of different transactions. Each of these transactions is signed digitally to make sure it is authentic and that no one can modify it. This way, the existing transactions and the ledger itself containing them can be said to have a high level of integrity.

The interesting thing about blockchain is that these digital ledger entries are distributed within an infrastructure or deployment. With these additional layers and nodes in the deployment, a consensus can be reached on the status of any transaction at any time. Plus, they also get copies of the ledger that has been verified and distributed to each of them.


So, How Does Blockchain Work Exactly?

Once a modification to an existing transaction or a completely new transaction enters a blockchain, a majority of the nodes in a blockchain deployment need to execute certain algorithms to verify and evaluate the history of each block that comes in.

When a large number of the nodes agree on the validity of the new block of transactions, it is accepted into the ledger and added to the chain of transactions. However, if a majority doesn’t come to a consensus, it is rejected and cannot be added to the chain.

With this model of distributed consensus, blockchain functions as a distributed ledger without having to involve a unifying or central authority in validating transactions.


To Wrap It Up

For a long time now, a lot of people have depended on third-parties and intermediaries like banks and other financial institutions when selling properties or carrying out transactions. However, there are instances where these intermediaries don’t have the level of trust some people might be looking for.

The Blockchain technology has invented a way for you to carry out transactions in a transparent, secure, and quick manner. Plus, you don’t even need to involve intermediaries.

Also, you can make transactions from any part of the world, and even places that financial institutions are difficult to access.

The blockchain is revolutionizing many industries. Now, we just have to sit back and see if it stands the test of time.

Updated 10:30 AM UTC+8, 09 Apr 2019

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