Blockchain, Crypto, NFTs, DeFi, the Metaverse (Phew!)...that's a lot of Technical language. These terminologies can be complicated for most non-specialists to unravel. You'd even be shocked to know that experts still learn new language in the Blockchain niche.
In this article, we will be discussing everything there is to know about Blockchain Technology.
Let's dive in…
What is Blockchain Technology?
Think of Blockchain Technology as an accounting ledger or a Google spreadsheet that contains information about every transaction carried out in history. The exciting thing about Blockchain Technology is that this accounting information is available to the public, and it is not controlled by any Government or individual.
In technical terms, The blockchain is a stretch of digital ledger that stores transactional records, also known as the blocks. The network connected through peer-to-peer nodes makes up this storage system, and it can be referred to either by its general term “blockchain.”
Can Blockchain be trusted?
Trust is indeed one of the basis upon which Blockchain technology was created. It is a highly secure system that utilizes what is known as a digital signature to perform transactions that are fraud-free. This makes it impossible for anyone to manipulate and corrupt the data of another user without the user's digital signature. Blockchain Technology is immutable and any change that occurs in the system is added to it rather than erased and corrected.
In the past, we relied on government and financial institutions to carry out transactions which meant there was a limit to our daily transactions and also, there was a possibility of a delay in daily transactions. Blockchain nullifies all of that as it has automation capabilities that can automatically be triggered when the criteria are met.
How the heck does Blockchain Technology work?
Blockchain technology has been gaining momentum in recent years. But how does it work? Is this just an additional change or something more significant with the potential to be revolutionary, so we'll take a look at what exactly blockchain technology is and why businesses are integrating its use into their operations today.
Blockchain Technology combines three technologies for efficiency.
- A peer-to-peer network
- A computing system for storing network transactions and records.
Cryptography keys are used in transactions between two parties. These individuals have their own private and public key pair, which they can use to generate a secure digital signature for identifying themselves on the Blockchain network as well as controlling cryptocurrency movements within it.
Users on the peer-to-peer network use cryptographic keys to perform different types of digital interactions. These are all secured through mathematical verification, which results in a successful transaction between two parties who have authorized each other's deals with their respective networks connected via Blockchain Technology.
What are the different types of Blockchain Technologies out there?
There are typically just four types of Blockchain Technology and they are restricted to Public Blockchain, Private Blockchains, Consortium Blockchain and Hybrid Blockchains.
Cryptocurrency like Bitcoin was created on a public blockchain. This technology has helped to popularize distributed ledger systems (DLT) and made them more reliable than before.
The public Blockchain removes the problems caused by centralized systems. It does not store information in one place, instead spreading it across an entire network of peers-to-peer computers called nodes or wallets . The decentralized nature requires some method for verifying authenticity; this has been done through two popular consensus algorithms: PoW (proof work) and PoS( proof stake).
Private blockchains are a type of blockchain that operates within companies and organizations. They can be compared with public ones in terms of functionality, but they have some key differences too - for one thing there's no requirement to use Bitcoin or another cryptocurrency as their sole means exchanging value between participants on the network (though this does happen). Another distinction worth noting is how restricted access these privately-operated networks provide its members.
For organizations that want the best of both worlds, there is a type of blockchain technology called hybrid. It lets you set up your own private permissionless system alongside one with restricted permissions which allows for more control over who can access specific data stored in this network--and what they are allowed to see publicly.
A fourth type of blockchain, called a "consortium" or 'federated' network (depending on how you want to look at it), has been gaining traction in recent years. This style is similar to hybrid networks because they have private and public elements; however there are limits as far who can access what parts depending upon which organizational members collaborate together for greater security purposes- essentially making this kind safe without any single entity controlling everything like with centrally owned chains where anything could happen due lack authority issues.
How many Blockchain Technology are there?
The world of blockchain is expanding at an incredible rate. As of 2022, there are over 10 thousand active cryptocurrencies and several hundred more non-cryptocurrency blockchains that operate on top of this technology.
Who Invented Blockchain Technology?
The idea of using blockchain to secure digital payments was first proposed in 1991 by mathematicians Stuart Haber and W Scott Stornetta.
However, it wasn't until cypherpunk Nick Szabo suggested bit gold - which never went beyond planning stages- that this technology saw significant mainstream attention. Satoshi Nakamoto's invention of Bitcoin further helped establish this technology.
Read Also: The Investor's Guide To Decentralized Finance
Today we see that Blockchain Technology has evolved over the years. Now, we see its application in the growth of Cryptocurrency from DeFI, to GameFi and the Metaverse. We also see it finding applications in other sectors. We believe we are only just getting started.