Have you heard of a blockchain? If you haven’t, simply broken down, it is a growing list of records called blocks, which are linked using cryptography. Cryptography is the art of solving codes. The blockchain is a database shared across a network of computers where the network makes constant checks in order to make sure that all copies of the database are the same.
Living in the 21st century, it would be a surprise if you have not heard of Bitcoin. Bitcoin is a form of online cash or cryptocurrency which is underpinned using blockchains. Let’s break down how Blockchain works and how it is used in technology today.
Blockchain Explained in a Nutshell
In a database, records are bundled together into blocks and added to the chain which consists of the record (can be any information), the block (bundle of records), and the chain (all blocks linked together). Now that you understand what a blockchain is, you may ask, how do records tie into Bitcoin? Let’s break it down further.
Step One: A deal is made with the blockchain and then a trade is recorded. For example, if Mr. Smith wants to sell two of his coins to Mrs. Smith for $100, a record is created listing the details including an electronic signature from both parties.
Step Two: The record is checked by the network by ‘nodes’ which are computers in the network. The ‘nodes’ check the details of the trade in the record to make sure everything has gone through correctly.
Step Three: When the record is accepted by the network, it is added to a block. All blocks contain their own unique set of codes known as a ‘hash’. The blocks also contain previous hash’s in the chain along with the new encrypted ones.
Step Four: Finally, the block is added to the chain. The hash codes connect the blocks together in a specific manner thus finishing the process.
Now that you know how Blockchain works, it is time to learn more about its uses and its ‘no master’ policy.
No Master Policy
Traditional ledgers have masters but Blockchain is ‘decentralized’ and has no master. In a centralized network, the authority is held by a single node, but in a decentralized network such as Blockchain, all nodes can access the data to compete and be added into the database.
According to Wired, Blockchains such as Bitcoin are open to anyone, thus making its members anonymous which can be a bit risky, but by using a password manager, two-factor authentication, or hardware wallets such as Trezor, one can ensure the safety of their money. Blockchain also sets up a test known as Consensus models which requires its members to prove themselves by accepting tokens that allow them to join the network.
Uses of Blockchain
* The largest and most popular use of the Blockchain is cryptocurrency which is the basis of the Bitcoin.
* Banking: Bank firms have been investing in Blockchains to simplify their record-keeping for payments.
* Supply chain: Recording trades on a blockchain offers a way to check the history of a product.
* Healthcare: With Blockchain, medical history is more secure.
* Voting: Blockchain records can create tamper-proof election returns.
* Property Records: Storing land records on a blockchain could cut down on costly title research and insurance.
According to Fortune, as early as 1981, inventors were attempting to solve the internet’s problems of privacy, security, and inclusions with cryptography. Now in the 21st Century, we have rendered a process that overrides the ‘safety-net’ of paying with credit cards online and ensures that users don’t have to divulge too much personal data.
Blockchain is our future and what better way to get started than to find a website that helps you learn the process and keeps your money safe? Here at SDI, we build custom software for our clients with the utmost expertise and professionalism. To get started, contact us today and get in touch with one of our specialists, Rob Lapointe at email@example.com