The Blockchain technology is gaining the trust with time. It is becoming the topic of discussion like other common topics are gaining the attention. After going through so many arguments and planning, Blockchain is becoming the part of all kind of industries. And it’s worth talking about the hot topic after knowing all the pros and cons of the term.
Have you ever thought about how businesses perform their functions and how they operate their tasks in the market?
The Blockchain is among the most important catchphrases of the technology right now. But what it is all about? Why is everybody talking about it?
What is Blockchain?
Let’s begin with the beginning. The first and significant application of Blockchain Technology was Bitcoin – released in 2009. Bitcoin is the crypto-currency and Blockchain is the technology that comes under it. Cryptocurrency is a kind of digital coin that is used in Blockchain.
By understanding the working of Blockchain with Bitcoin, it will help us in knowing that how this technology can be used in other real-world cases.
Bitcoin is the vision-reality of a mystifying person or group of people known as Satoshi Nakamoto. Nobody is aware of the identity Nakamoto, but his vision was positioned in the 2009 Whitepaper known as “Bitcoin: A Peer-to-Peer Electronic Cash System.”
A bit about Bitcoin Blockchain
The Blockchain after the Bitcoin is a public record book which has every transaction that is taking place. It cannot be interfered or changed backwardly. According to the advocates of the technology, Bitcoin is secured and much safer than any other system.
Here are few facts about Bitcoin:
- Any central authority does not issue it.
- The limit is present of about 21 million.
- For now, only 17million is in use.
- The identity of the Bitcoin creator Satoshi Nakamoto is still a mystery.
- The first transaction with Bitcoin was done by the programmer – Laszlo Hanyecz, who invested 10,000 Bitcoins on two Papa John’s pizzas in the year 2010.
- Sometimes people use Bitcoin for buying illegal products like drugs.
What’s the working of Blockchain Technology?
The Bitcoin is “decentralized,” that means there is no central authority to control it.
While Central banks issue traditional coins, but there is no central authority in the case of Bitcoin. Instead, miners – a network of people that maintains the Bitcoin Blockchain.
These “miners” or “nodes” work continuously for solving the complex mathematical problems for making the transactions. These groups are present with their purpose-built computers for making the transaction process in action.
Think lots of people are making the Bitcoin transactions at a time. Each transaction that is originating from the wallet has a “private key.” It is a digital signature and gives the mathematical assurance that the wallet’s owner does the operation.
Signature is for text or data file. It consists of an SHA-256 algorithm which has an almost unique 256-bit (32 bytes) for the text. Mainly signature is made up of unique bits which are known as Cryptographic hash 0r ‘digest.’
Now imagine, many transactions are going on at the same time across the world. All these transactions are collectively gathered in a block which is organized by the strict cryptographic rules. Then the block is sent to the Bitcoin network, which is the group of people running high-powered computers. All these computers struggle to confirm the transactions by solving mathematical puzzles.
The winner is awarded in Bitcoin.
This confirmed block is added on top of the preceding blocks forming a chain of blocks known as Blockchain.
The best thing about Blockchain is nobody can corrupt its files.
So, why Blockchain is Tamper proof?
Because when a block is added onto the chain, it has a strong, cryptographic reference to the earlier block.
That reference is used in a mathematical problem that needs to be solved to bring the next block into the network and chain. The part of solving the puzzle has calculations of random numbers known as “nonce.” The nonce is then combined with other data such as the transaction size, which creates a digital fingerprint known as “hash.” It is encrypted, which makes it more secured.
Every hash is exclusive and should meet certain cryptographic conditions. After completing all these steps, the block is completed, and it is added to the chain. For interfering into this chain, each previous block, which is almost half a million, will need the cryptographic puzzles to be reminded, which are next to impossible.
You can consider the Blockchain technology as an unnecessary and complicated process for moving the money.
Knowing the Pros & Cons of Blockchain technology!
When you’re using the traditional methods of payment, each transaction in the world is registered on the privately-held databases which are owned by corporate and state entities. The public cannot access these databases. Therefore, they are closed.
Sometimes they are owned by the single entity. Due to this nature, anybody can access it illegally, or its network can be attacked by some hackers, unlike the Bitcoin’s Blockchain.
Now think Blockchain is having such a large database. It keeps all the transactions in Bitcoin, it doesn’t allow repeated payments and involves several parties for authenticating the movement of the digital coin.
As Blockchain is non- central network, it means if one portion of stops working, the whole network will not go down. Therefore, even if one minor went out of actions, for instance, transactions will still work.
The blockchain is a non-central network. With this, however, come many problems.
One big problem is that the transaction time and costs are rising exponentially as the network is becoming more crowded. This is starting many disagreements among different parties that uphold the network about how the technology should expand in the future to address these issues.
For example, the previous year, a group of developers was not getting agreed about the future of Bitcoin, broke off and divided the original Blockchain. This led to the formation of a Bitcoin offshoot known as “Bitcoin cash.” Another such division took place which resulted in Bitcoin Gold.
The arrival of Bitcoin is something very interesting among the users – multiple entities connect with each other by trusting and building a secure connection for the transaction and too without introducing any new centralized party.
All credit goes to Blockchain technology as being decentralized, it is connecting all the users globally. Over the next decades, it will become a regular thing among all the industries across the globe.
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