According to the study, the demand for cryptocurrencies has decreased by about 40% in just 4 days after introducing a 30% tax in India. But, on the other hand, 15% of the total estimated number of 115 million crypto investors are from India. Statistics show that 56% of Indian businesses are leaning towards blockchain technology to facilitate the process of transactions and tracking assets.
What is Blockchain Technology
Blockchain technology is a system that records information or data in such a way that it can’t be hacked and changed once added. Sometimes, it is referred to as distributed ledger technology (DLT), as each block of the chain contains the transaction and whenever a transaction occurs, it gets added to the participant ledger.
As a result, the log of digital assets remains unchanged and translucent. It is possible to be accessed by the use of a fixed cryptographic signature called hashing. Moreover, it protects the data from hackers as it is immutable and can’t get altered.
How Does Blockchain Works?
It consists of three crucial components, i.e., blocks, nodes, and miners.
Blocks:
Every blockchain consists of numerous blocks, and each block connects with the previous one with the hash. It must contain three factors:
- Each block contains some data part.
- The blocks are generated randomly by the nonce, which is a 32-bit whole number, and then this nonce generates a block header, hash.
- Moreover, the hash is a 256-bit number attached to the nonce. This hash starts with a huge number of zeros.
When the first block of the blockchain creates, a cryptographic hash generates by the nonce. Then the data are authorized and fixed to the nonce until mining.
Miners:
It helps in creating a new block in a chain throughout a process and is called mining.
Mining a block is not an easy task, as each block has its unique nonce and hash, but it references the hash of the previous block in the chain. Miners use special software to find out the accepted hash generated by the nonce.
Creating the change in a single block is extremely difficult in blockchain technology as it involves re-mining not just for the one block but also for all blocks that come after it.
When a block is successfully mined, the change is accepted by all the nodes on the network.
Nodes:
The crucial concept in blockchain technology is decentralization. Blockchain is a kind of distributed ledger that connects to the chain via nodes. Moreover, nodes are a kind of electronic device that sustains the blockchain copies and keeps the network functioning.
Each node has its copy of the blockchain, and whenever a newly mined block adds, it is approved by the algorithm,i.e, fully updated, trusted and verified.
While the blockchain is transparent, it is viewed by every individual with its own unique alphanumeric transaction number that helps them to view their transaction.
Fundamentals of Blockchain Technology
Public Distributed Ledgers:
- They are used to record transactions across multiple devices.
- The distributed ledger data can be accessible to the users of the blockchain network.
- Here the transactions are approached and verified by the users that are associated with the bitcoin network.
Mining
To validate a new transaction and record it in the public ledger, miners get rewarded as they use their resources like time and money.
Encryption
- Blockchain uses a cryptographic algorithm (SHA256) to protect the block of data from unauthorized parties.
- Every user in the blockchain has a unique key.
Proof of Work:
A method to solve the complex mathematical puzzle problem to validate the transaction is called mining. Moreover, users who solve these puzzle problems are called miners.
Why Blockchain Technology is Popular?
Assume you are transferring money online to another person from your account. Your bank updates your transaction record automatically. It looks simple enough, but this is a potential issue that is neglected by us.
People who are familiar with the truth, that these transactions have had third-party involvement in recent years and can tamper easily. That makes it essential for banks and organizations to maintain data security with blockchain technology.
The emerging technology in the digital world that come up with advantages:
- It is highly secure as it uses digital signatures that create a fraud-free transaction.
- It generates a decentralized system for smooth, safer, and faster transactions.
- It is programmable and generates systematic action, payment, and events automatically.
Wrap Up:
The technology is set up and operates in different ways and procedures to secure the transaction process, only seen by authorized users. You can take bitcoin as an example that shows how big blockchain technology becomes.
With its success, blockchain will surely rule the digital world in the future.
IPEM, one of the best MCA Colleges in Ghaziabad organizes workshops, guest lectures, International conferences and live webinars for IT students as extracurricular activities.
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