The popularity of Cryptocurrencies have increased greatly in the last few years and it is for this reason that the people are also finding a lot of interest in the Blockchain technology. Most of the time, the Blockchain has been used as a generic term and this is used by people along with Bitcoin, the cryptocurrency that has been created using this latest technology.
What is Blockchain?
This is a ledger that has been distributed globally and it consists of data blocks that are arranged sequentially in a chain. In each of these blocks, you get information about the preceding blocks. The data that is there in the blocks are first copied and they are then stored in the different mining nodes. It is not bound to any particular server and therefore substituting the result becomes almost impossible. There is a set of rules that are locked permanently and it is these rules that govern the data that flows through the nodes.
Parts of the Blockchain Technology
The Blockchain technology consists of three parts and to know about these parts in details, you can go through the discussion below:
- The blocks store important information about the various transactions and these include time, the dollar amount of the recent Amazon purchases, and also data. Amazon retail does not work on blockchain technology.
- The information about who is participating in the various transactions are all stored in the different blocks. For your splurge purchase in Amazon, there would be a block that will record your name along with the Amazon.com. Thus your information is stored with a unique signature and not with your actual name. This signature is similar to the user name.
- It is the information in the blocks that differentiates one block from the other. Just as the names distinguish us from each other similarly these blocks have unique codes referred to as hash that distinguishes it from one another. The hashes are the cryptographic codes and these are created by special algorithms. For example, you have purchased in Amazon and while it is in transit, you decided to order one more. So even though the two purchase details would be similar, however, the blocks for each of these purchases would be different an would have unique codes.
Each of the blocks is used to store one single purchase in Amazon, but in reality, things are a little different. One single block in the Bitcoin is used to store data of a maximum of 1 MB. Thus, depending on the size of the transactions, one block will be able to store up to a maximum of thousand transactions.
This is How the Blockchain Technology Works
When a particular block stores new data, it gets added to the blockchain. Blockchain consists of several blocks that are strung together and to ensure one block gets added to the blockchain, it is necessary for a total of four things to happen:
- There has to be a transaction. For example, if you make an impulsive purchase in any of the e-commerce sites, you often click on to the various check out prompts and then go against your better judgment and make a purchase. There are many scenarios where the blocks will make a group together and store thousands of transactions. Therefore the purchase made in the Amazon will be packaged in the various blocks along with other necessary information about the user transactions.
- The transaction is verified. Once the purchase is made, the computers check and find out if the transaction you made is exactly as per the details mentioned.
- Once the transaction is verified, it gets a green light and then the transaction gets stored in the blocks. The digital signature of Amazon, your digital signature, and then the dollar amount are all stored in one block.
- This block is then given a hash, a unique number.
This is a complex technology and therefore the question that might arise here is if this technology is so much complex, then why is it called Blockchain technology. The answer to this question is that at the basic level, the blockchain is nothing but a chain of blocks, but it is not used in the traditional sense of the term. Here when people talk about blocks, it means digital information and the chain means a public database. In Blockchain technology, the blocks are made of the digital pieces of information.