Blockchain is one of the core technologies behind cryptocurrency. Blockchain is a system of recording digital transactions making it virtually impossible for hackers to cheat the system. In a blockchain, the records or transactions are maintained in a digital ledger that is duplicated and distributed across a wide network of computer systems.
Every time there is a change to a blockchain transaction, the digital ledger is updated across the network. That means that the digital ledger of every participant on the network is automatically updated with the latest changes. For hackers to successfully cheat the system, they would have to individually alter every single transaction on the network. This makes blockchain an extremely safe and reliable system for recording transactions, as well as securing applications
How does blockchain work in cryptocurrency?
The sale and purchase of cryptocurrency are entered and distributed across a network of powerful computers called nodes. These nodes are used for mining of Bitcoin and other cyber currencies to enter and confirm the transactions. The miners are rewarded for their work with cyber currency which is deposited into their digital wallets. The rewards for the miners are paid by network fees which are passed on to the sellers and buyers of the cryptocurrency. Once the transaction is confirmed by the network, the block is permanently “chained” to previous cryptocurrency transactions using a cryptographic finger called the hash. This completes the transaction.
What are the benefits of blockchain?
Decentralized: Built on a decentralized system, no government agency or private institute can control the system or the blockchain itself. Not only does this eliminate the chances of any manipulation by the government or private institutions, but also reduces intermediary costs of the transactions.
Availability: Blockchain processing is handled across a completely distributed network, and runs 24/7 and 365 days a year. Transactions don’t require (or allow) human intervention and aren’t bound by regional business hours or time zones.
Transparency: Transparency and anonymity of the transactions mean that users of the network can see all the transactions as part of the completely transparent system but they are not able to determine the owner of the transactions.
How can businesses benefit from blockchain?
There are several benefits for businesses to use blockchain’s encryption. As blockchain is completely secure and transparent, all parties involved in the transaction can feel safe. The decentralized structure assures businesses that no single government or private institution can alter the fate of the cryptocurrency. Finally, blockchain can reduce the costs of transactions for businesses by eliminating third-party providers, vendors, and other middlemen. The efficient record keeping of the system can also help improve auditing processes for businesses.
Beyond the realm of secure digital payments, blockchain is making inroads into applications and tech infrastructure including finance, supply-chain management, and cloud services. For these industries and more, data storage, identity management, and smart contracts are applications where blockchains could shine.