Blockchains are incredibly popular nowdays. But what is Blockchain Technology,
how does it work, and how it is used? Let's discuss.
Blockchain, as the name indicates, is a chain of blocks that contains information. This technique was originally described in 1991 by a group of researchers and was originally intended to timestamp digital documents. However, it remained unused until it was used by Sukoshi Nakamoto to build Crypto Currency in 2009.
So, how does it work? Let's take a closer look at a block. Each block contains some data, the hash of the blog and the hash of the previous block. Since there are different types of blockchains, data stored inside a block depends on the type of block chain being used.
Let's look at an example.
Here we have a chain of 3 blocks. As discussed, each of these blocks has the hash as well as the hash of the previous block. So, block 3 will point to block 2 and block 2 will point to block 1. Now the 1st block is a bit special since it cannot point to the previous block. As a result, this block is called the genesis block. Now let's look at proof-of-work. It is a mechanism, used by blockchains to mitigate, that slows down the creation of new blocks. For example, it takes about 10 minutes to calculate the required proof-of-work and add a new block in the case of Bitcoin. As a result, security of block chains comes from its creative use of hashing and the proof-of-work mechanism.
Well, since we have started discussing the security of blockchains, hashing and proof-of-work mechanism is not the only technique to secure a blockchain. Instead of using a central entity to manage the chain, block chains use a peer-to-peer network. When someone joins this network, he or she gets a copy of the block chain. The node can use this copy to verify the order and accuracy. When someone creates a new block, it is sent to everyone on that network. Each node, then verifies the block to make sure that it hasn’t been tampered. After a positive verification, each node adds the new block to their own blockchains.
Due to its security features, the Blockchain Technology has attracted a lot of people. This is an effective technology that could be used to store sensitive data such as medical records, creating a digital notary or even collecting taxes.