Welcome to the second article of my blockchain series. In my previous article, I explained and illustrated what the technology is all about. You can read it here if you haven’t. Insights were made.
Imagine a world where trust is built into the system itself. That’s the promise of blockchain technology. The current system is not perfect and that is why this digital database offers a new, efficient way to manage data and transactions.
Walk with me.
The core features of blockchain are immutability, decentralisation, transparency, security and a distributed ledger system.
Now let’s learn them in more detail.
- Immutable: This means unchangeable. Once a new block of data joins the blockchain after being verified by nodes, it cannot be removed or edited by any user of the system.
- Decentralised: Because this technology is permanent, it is extremely risky to leave it in the hands of one, central computer. Such a computer could have a fault or record an invalid transaction, which this could affect the whole system. This is known as a single point of failure in Computer Science. Hence, the Blockchain is designed as a system where multiple computers share the power to control the process and the data recorded.
The participants are connected on a particular network known as peer-to-peer network. They operate nodes (computers) that run a program to enforce the business rules of the blockchain. This means there are standards and procedures that they all follow to add blocks and update the ledger. This whole concept of shared control is called Decentralization. - Distributed Ledger Technology (DLT): Remember my illustration from my previous article? How everyone at my company operates a copy of a ledger containing transaction records and updating their copies at the same time, whenever a new transaction occurs? That’s what we mean by distributed ledger technology. It makes the decentralisation in the system work. The Blockchain is a type of DLT and there are other types out there.
- Consensus: When multiple people are involved in deciding on choosing a new leader for their group, at least, most of them have to agree. Same with blockchain. The nodes have to collectively agree on the validation of transactions and the addition of new blocks. There are algorithms for the nodes to reach an agreement quickly and faster and for the smooth functioning of the system. Some examples of such algorithms are proof-of-work and proof-of-stake, which I will explain in my next article in more detail.
- Transparency: Many blockchains are open to everyone, allowing any person to view the transaction history and track changes over time. Consider Bitcoin as an example. Its transaction history is publicly accessible, meaning that anybody can view it. Everything is transparent for everyone since it is decentralised, allowing anyone with internet access (blockchain can’t work offline) to view the data and examine the transactions. We can have confidence in a blockchain’s data.
- Security: The technology uses cryptography and hashing to protect the data in the blocks from intruders/hackers. They are strong security methods.
Each block has both its unique hash and the hash information from the previous blocks, making it hard to tamper with them. Multiple nodes having a copy of the database also ensures security. If anyone wants to hack and alter a record, that person would have to alter the records of all the computers maintaining the ledger which is practically impossible.
TLDR
Blockchain technology is unchangeable, transparent, secure and is controlled by several computers. The computers monitor and validate the transactions.
Thank you for reading. I really do not take your attention for granted. Also please clap and drop a comment or any questions that you might have.
My next article will cover the different types of blockchain technology. Be there.
Cheers.
