What is a simple explanation of blockchain technology
To solve the double-spending problem associated with digital currencies, Satoshi Nakamoto devised an immutable ledger of transactions that chains together blocks of data using digital cryptography. While the idea works extremely well for Bitcoin and other cryptocurrencies, there are loads of other useful applications of blockchain technology. Here are 15 of them. The original concept behind the invention of blockchain technology is still a great application. Money transfers using blockchain can be less expensive and faster than using existing money transfer services. This is especially true of cross-border transactions, which are often slow and expensive.
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What is a simple explanation of blockchain technology
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Content:
- 15 Applications for Blockchain Technology
- What is the blockchain technology? A non-technical guide
- What is blockchain? Blocks, distributed ledgers and nodes explained in simple terms
- Blockchain — A Short and Simple Explanation with Pictures
- What is Blockchain?
- Blockchain Technology – Everything you need to know in layman’s language
15 Applications for Blockchain Technology
The blockchain is a ledger of records , called blocks. They are interconnected via cryptography. Anyway, if you genuinely want to understand what blockchain technology is , keep reading. On the other hand, it also holds information about the previous word, thus they are logically linked to each other.
Once written, the book is reviewed by an editor, who validates each word and agrees on the information it carries. Every block is connected to the subsequent one, thus creating a chain of blocks. Just like logically connected sentences create a book. Today the technology is known and appreciated more and blockchains are now applied for different reasons than money.
Apparently, they have the potential to save money as well. The main issues the blockchain tried to address back in were the financial institutions, i. That system would make payments faster, more secure, and would require smaller fees which would be necessary to sustain the network. And the main goal — the removal of the middle man. This is where the banks kick in, and it gets a bit complicated. Initially , your bank takes a fee for the transaction, reducing the amount of money Bob will receive.
Then — it takes time to wire money abroad. Sometimes up to a week. As this takes place, the bank from which Bob will withdraw also takes a cut , thus reducing the amount even more. Remember the analogy, a while back, about the blockchain being like a book?
To be able to understand the next part, imagine the writer of the book as a miner — he creates mines the words and turns them into sentences blocks. And the editor represents a node — they verify the blocks. Once the block is verified, the node keeps it forever. So you can think of miners as … well, miners.
And the nodes could represent the accountants in a mining operation. Nodes validate the blocks, proposed by the miners. A full node keeps a complete copy of the blockchain ledger. Unlike miners, the nodes keep the information about every preceding block since the beginning of the blockchain. That way, the info in the blockchain is always backed by all the nodes.
When a block is added to the blockchain, all nodes receive a real-time update of their copy of the ledger. You send digital currency via your digital wallet to someone else. The two main differences from traditional transfers are the blockchain saves you time and money. Coincidentally, these are two of the most precious personal resources in the modern world. First of all, blockchains operate as peer-to-peer networks.
Secondly, a blockchain is usually a vast network of miners and nodes that guarantee its security. The blockchain technology will take care of the rest. There are four things you need to make a transaction in the blockchain. Now we can focus on the underlying technology. By now, you already have a fairly decent knowledge of what blockchain is. The whitepaper presented two different terms, which are inseparable today.
Blockchain structure. Image by the author. Each block contains a certain amount of data. These are the three need-to-know elements, comprising a block:. Only that it represents a sequence of numbers and letters. The hash depends on what encryption the blockchain uses. Usually, a bitcoin block can contain about transactions. In that case, the hash of the block storing this data will be this:. The code above summarizes all the transactions included in the block. Blockchains use the Merkle Tree structure to organize the information.
Each leaf contains the information hash about the other leaves in the branch. To simplify it even more — the hash is like the ID of a block, containing all the information in it. And the hash of a block is passed on to the subsequent one. Once this operation is concluded, the blockchain marks the block with a timestamp.
The timestamp is the information about what and when happened in the blockchain. This is especially important since it eliminates the possibility of spending the same unit of cryptocurrency twice.
You can think of it as a notary, who verifies that the data in the block is accurate and that it happened at the mentioned precise moment. The timestamp is crucial to blockchain technology because each node can trace back when each transaction occurred. Instead, you change the ownership of the currency you had to that of the new owner.
As mentioned before each block contains up to several thousand transactions. These are the details included in each one:. When a miner successfully mines a block, not only does it get a reward, it also receives the fees from each transaction in the block. These fees are usually a tiny percentage of the transferred amount. Each transaction is protected by cryptography on every level, thus making them secure.
The network is almost unhackable. Since blockchains are typically vast networks of miners and nodes, this makes hacking the blockchain practically impossible. Cryptography is utilized in blockchain technology to transform plain text into an unreadable sequence of numbers and letters.
To be able to read the message you need to use a decipher. In the bitcoin blockchain, the decoder is called a private key. Only you have it and can use it to receive or send a transaction. You can think of the key as a document, which verifies your identity. You and only you have the personal key.
No one asks for your personal information. The only thing that matters to the blockchain is the consensus of its nodes, not their names. The bank itself decides if a transaction is valid or not.
Imagine a castle, surrounded by divisions of Byzantine troops. Equally ranked generals are in charge of each division. For their attack to succeed, they have to coordinate their actions.
The thing is, there are a couple of things that could go wrong. Untrusted entities comprise the system, and the way for it to work is for the majority of nodes to reach an understanding if a transaction is valid or not. While the blockchain development is still a work in progress, we may expect new types of consensus mechanisms. Still, so far different blockchains use four major protocols to resolve the consensus issue.
The bitcoin blockchain uses this protocol to verify transactions. The proof of work requires a miner to solve a complex mathematical problem to create a block and queues it for verification.
Then the nodes in the network either verify the block or not, thus adding it to the chain or deleting it. The downside of this protocol is the sheer amount of computing power and electricity used in the mining process. Soon to be adopted by Etherum, the proof of stake protocol provides a different consensus mechanism than the PoW. Once the block is verified, the node receives a reward based on that stake.
Using the POS protocol is more resource-friendly and needs little much, much less computing power. This is the most democratic system. The chosen validator becomes a delegate and receives the right to validate transactions, thus obtaining the rewards for its efforts.
This protocol works like a country — meaning, it has citizens, delegates, and speakers. The citizens represent users who own the base cryptocurrency. These citizens then elect the delegates the nodes , which verify the transactions.
Once a block is ready, a speaker a randomly selected delegate proposes the block to the chain. Not that the technology is simple itself, but its philosophy is quite elegant. Today we live in a centralized society. We have governments, banks, and many businesses we use daily — like Amazon, Facebook, Google, etc. With each passing year, since the caveman era, more and more power has been focusing in the hands of a few people and enterprises.
Satoshi Nakamoto wanted to change the status quo, so he proposed to give some of the power back to the people. The decentralized network means there is no single entity in control of blockchain technology.
What is the blockchain technology? A non-technical guide
While blockchain hit the mainstream and became a buzzword with bitcoin and other forms of cryptocurrency, its potential extends much further. By allowing digital information to be distributed and not copied, blockchain technology is gaining attention for its potential use in many industries. At its most basic, a blockchain is a time-stamped series of immutable data records that are managed by computers not owned by any single entity. Each block is secured and bound to the other using cryptographic principles, or the chain.
What is blockchain? Blocks, distributed ledgers and nodes explained in simple terms
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Blockchain — A Short and Simple Explanation with Pictures
Blockchain technology has become a regular news item with the emergence of cryptocurrencies like Bitcoin. Today, Blockchain technology is disrupting almost all markets, changing the way we do our day to day business. Yes, blockchain technology is changing our world. Thank you for the excellent feedback on our earlier articles in this series — on Artificial Intelligence, Internet of Things IoT , and Automation. Feel free to post your feedback on this article in the comment section at the post-bottom.
What is Blockchain?
There is much hype about cryptocurrency and blockchain concepts, yet there is even more confusion related to them. Let us clear this mix-up and define what the blockchain technology is and how to use blockchain in various industries. While blockchain is a complex technology, its structure may be brought down to a simple explanation. Basically, it comprises small chunks of data — blocks — linked sequentially in a database — a chain. A blockchain functions as a growing list of data records, most commonly — transactions.
Blockchain Technology – Everything you need to know in layman’s language
What is blockchain? Despite having been answered repeatedly, this question keeps popping up with every new crypto bull run, with every new milestone reached. Published in , the influential whitepaper that proposed Bitcoin and defined the core principles upon which blockchains are built puts it this way:. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. The paper goes on to elaborate on the ideas summarized in the abstract, but while the examination of those ideas is thorough, it is not exactly aimed at the general public. One widely used approach is to assign colloquial terms to key blockchain terminology.
I recently attended an industry seminar where the concept of the Blockchain was explained. At the end of the session, walking out of the lecture room I heard one of the attendees say to a colleague "I'm still not sure what exactly Blockchain is Many of us know that Blockchain is a topic that is hot at the moment.
Blockchain technology is being called the most important innovation since the internet. This article will explain what blockchain technology is, how it works, and its benefits in a simple an easy-to-understand way. Are you ready to get started? Blockchain is a database or a ledger. When you make a purchase with your credit card, you trust that the credit card company and the bank will keep your personal information and transaction details safe, for example. This belief in institutions is not only applied to financial negotiations.
In this post I explain what is Blockchain and how it works with a very simple example and step by step. If you already know a bit of Blockchain technology, go straight to the second part of this article, about consensus. Tim asks Linda for a small loan in class, Linda agrees but needs some confidence on Tim returning her the money. Linda has several options. So instead of asking their teacher to observe the transaction, she asks to the rest of her classmates. There are 20 students in class apart from Tim and Linda. So the effect is the same: debt settled.
The blockchain is a ledger of records , called blocks. They are interconnected via cryptography. Anyway, if you genuinely want to understand what blockchain technology is , keep reading.
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