blockchain sample image banner min

Know the basics of blockchain technology

Blockchain is a database that holds records of different types of transactions and information. To maintain this decentralised server, numerous validating nodes keep the same records and constantly update. These nodes also bind data in a digital format and include them into a block that is then added to the chain. 

Any data stored in the blockchain is permanent and cannot be altered, making transactions safe and secured. This aspect is extremely important in any cryptocurrency system to safeguard all data from cyberattacks.

What makes this different from other databases is that it gathers information in a group known as the ‘block’. And once it reaches a certain limit, validators close and combine it with previous blocks, adding it to the ‘chain’. This creates a chain of information that is openly accessible and can be seen by anyone.

Blockchain is also known as a type of distributed ledger technology or DLT since it’s maintained by numerous servers and instead of just one. So if you’re eager to know more about blockchain, Bitcasino has listed everything you need to know from its process and characteristics down below:

Transaction process

Just like in using any other database, validators use the blockchain by going through a process from receiving the data, getting it transmitted, confirming its validity and uploading it on the chain. To get a more detailed idea, here’s the process explained through steps:

Step 1: The data gets recorded

As soon as a transaction is confirmed, this instantly becomes new data recorded in the database system. This includes all the information regarding the transaction such as private keys, sending and receiving addresses and crypto amount.

Step 2: Transmitted to P2P computers

After the data is received, it is sent to a network of peer-to-peer computers all over the world.

Step 3: Confirms the validity of the transaction

Next, special nodes in the network confirm the validity of a transaction. Once they reach a consensus that all information is true, the next step is done.

Step 4: Join in with other blocks

Once the transaction is confirmed to be legitimate and valid, its hash is created and all the data is transmitted into a block. When the block reaches its limit, the hash of the previous block is included into it and it’s uploaded to the blockchain. After this step, the process is complete!

Characteristics

There are several components that make up a blockchain, and understanding the concept as a whole requires learning each one individually, from its security and transparency to efficiency, to name a few. So, if you’re ready to learn more about its qualities, check them out one by one below:

Transparency

Transparency is one of the most prominent properties of blockchains. It functions as a public record book that anybody can access, but the transparency it offers is limited only to viewing since no one, not even the validators can change the data uploaded on the blockchain.

Permanent

Blockchains permanently store records and any form of data in the system indefinitely, making it safe from any foul play and any form of tampering.

Secured

Another notable feature blockchain has is its security. This is because all information is stored sequentially in blocks that contain two ‘hashes’, its own and that of the previous block. To change any of the data included in the block, both the two hashes need to be decrypted as well and doing this requires tampering with all the previous blocks up to the very first one. This makes tampering with the blockchain an impossible task.

Private transactions

Although the blockchain is known to be an open database, it still provides users the necessary privacy. It’s transparent in the sense that everyone can see and access data on the blockchain, but it’s private when it comes to identification. Instead of names, only public wallet addresses are recorded, making it pseudonymous.

Decentralized

What makes blockchains decentralized is it doesn’t keep data in a central server stored in one location. Instead, it has a network of servers spread across the globe that constantly updates so everyone gets to access the same data. As an effect, it can function without a third party and central control.

Accuracy within the process

One of the things that make blockchains reliable and efficient is their ability to function without human interference, making the process free from any human error. The procedure is mostly carried out by a series of networks that perform computation, verification and other functions to ensure that transactions are correct and fair. The only part humans take in this process is setting up the servers and making sure that they are all functioning accordingly.

Cost-efficient

Because blockchains are decentralized and don’t rely on third parties like banks, transacting through them is cost-effective. Banks almost always require you to pay fees and provide other requirements to make transactions. Some partner with third parties to offer faster services which only adds to the fees you already need to pay.

With blockchains, you no longer need to pass through a third party to make a successful transaction, allowing it to have less to no transaction fees.

Time-efficient

When it comes to time-efficient transactions, you can always count on blockchains that operate 24 hours every day and confirm transactions in no longer than 10 minutes. This is more reliable and convenient compared to centralized institutions that only run 5 days a week usually from 8 AM to 5 PM and process transactions for days.

Improving the world, one block at a time

Since its inception, the blockchain has improved technology in ways more than one. Though it was first utilised in the crypto sphere, it’s now used in other industries such as finance, business and logistics to ensure transparency and accountability. With continuous development, you can expect more industries to benefit from blockchain’s innovative features.

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