What is Blockchain Technology explained in Simple and Easy Way!
Let’s note some basic points here. A and B never have original data for transaction! All the data resides with Bank ABC. A cannot see B’s…
In the past few years, everyone has been made acquainted with the term blockchain! But only a few actually get it! So, let’s try to understand it from the basics. Say, there is a payment gateway for the bank name ‘ABC Bank’. I am ‘A‘ developing an application, I use ABC Bank’s payment gateway what it means is that Bank ABC provides me an API through which People using A’s application would be able to enter Credit Card number And PIN, the API would validate the information and allow the user to make a transaction. Bank would have all the details and would send a copy of the same to A’s application with a reference number which A would store in the database and use another API to get restricted details of the transaction through that reference number. Now, there is another person ‘B’ doing the same for his own application, and the same procedure happens for B too.
Let’s note some basic points here. A and B never have original data for the transaction! All the data resides with Bank ABC. A cannot see B’s data ever!!! And B cannot see A’s data because they both have an individual subset of ABC Bank’s Data!
Let’s have a world where if from A’s application transactions are made or B’s application or even directly in bank ABC all have live addition of the same piece of data every time, which means that all are working on the same piece of data, all 3 have same data. Here’s when blockchain comes in picture.
What exactly is BlockChain?
According to the authors of the “Blockchain Revolution,” Don & Alex Tapscott, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Where digital ledger means that there is no central administrator or centralized data storage pretty much like how google sheets work! Blockchain is a new and innovative way of documenting information on the internet, which has become alive again after introduction with bitcoins. A blockchain is a chain of time-stamped blocks that contain an immutable record of data and is managed by a cluster of nodes, not by any single authority. Let’s get into the major components, then the picture would be more clear!
Major Components of BlockChain:
- Blocks: A block can be considered as a page in the ledger. Each block in the blockchain comprises of data, timestamp, a hash of the block, and a hash of the previous block.
- Private Key Cryptography: In Private key, the same key (secret key) is used for encryption and decryption.
- Distributed Network with a shared ledger(database): A node on the network starts a transaction by creating it and signing it with its private key. Transactions comprise the logic of transfer of value, source and destination addresses, rules, and validation information. The next step is that the transaction must be verified. A network of computers on the blockchain verifies the transactions to be stored in a block. Once they confirm that the transaction actually happened, they add it to the block.
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