Blockchain is not rocket science

One way to describe the last ten years is a time of digitization and virtualization. Every Internet user is familiar with digital papers, signatures, virtual meetings, and even businesses. However, cryptocurrencies and digital currency are fraught with uncertainty. The fundamental problem is a need for more understanding of how it operates and who owns all electronic money. Moreover, due to the wide range of terminology, like “blockchain,” “node,” “blocks,” “memo,” and others, the process becomes much more challenging.

But is it so? Is blockchain rocket science and so hard to understand? Well, if you continue reading, you’ll find out that everything is much easier than it seems.

What is Blockchain?

Data is stored and recorded using ledger technology called the blockchain.

Any discussion about the future of technology, from the influence of cryptocurrencies to new developments in cybersecurity, appears to center on the keyword “blockchain.” Yet, many people need clarification on blockchain technology, even though its uses seem limitless.

Transactions were recorded in written ledgers and kept at financial institutions in the past. Those with privileged access may audit traditional ledgers, nevertheless. By eliminating the confidentiality around handling information, particularly transaction data, blockchain took these ideas and democratized them.

In its most basic form, a blockchain is a continuously updated and reviewed distributed ledger of transactions. It may be configured to record and monitor anything of value over a network dispersed across many places and organizations. This technology is also known as distributed ledger technology (DLT). As a result, a global network of interconnected computers is formed.

Despite being often linked to cryptocurrencies, blockchain technology is not just used in the market for digital assets. Because of its unique capacity to add and store data, it can do various tasks across several sectors, like gambling, medicine, agriculture, and many more.

What does a blockchain look like?

The block and the chain are the two halves of a blockchain.

A block is a group of data chronologically connected to other blocks in a virtual chain. Blocks can only hold a specific amount of data until they are complete.

Additionally, each block has a timestamp, which makes it apparent when the data was captured and saved. This is crucial for transactions or supply chain data, where knowing the precise moment that a payment or item was handled is critical.

In what way is data contributed to a blockchain?

The blockchain is not only transparent with data, but it is also a safe means to keep information. Here is how a transaction gets added to a new block in Bitcoin, as an example:

A message, including the sender’s and receiver’s public addresses and the transaction’s value, is generated whenever a bitcoin user makes a transaction. The sender takes this data, combines it with their private key, and then hashes it (turns it into a fixed-length code.) This generates a digital signature to verify the sender’s intention to transfer the specified bitcoin to the recipient.

The message is subsequently broadcast to the network along with this digital signature, the sender’s public key, and the message, like, “Hey, everyone! I want to transfer this individual some bitcoin.”

The bundled transaction enters a blockchain, known as “mempool,” a queue of other pending unconfirmed transactions waiting to be added to the blockchain.

In the case of the Bitcoin network, miners who have successfully found new blocks through proof-of-work then 

• take a batch of transactions from the mempool (typically based on which ones have the highest fees attached), 
• verify each transaction to make sure each sender actually has the amount of bitcoin they want to send in their wallets, 
• run it through software to make sure the packaged data (digital signatures, messages, and public keys are legitimate),
• add it to the new block, and then send the proposed new block to the network so that other miners can check that everything is right.

Like proof-of-stake blockchains, this procedure involves users who have locked away a certain amount of bitcoin, often known as “stakers” or “validators,” finding and validating transactions.

Nodes are capable of a wide range of actions. They consist of maintaining a history of all transaction information, validating transactions, and, in the case of mining nodes or validator nodes, creating new blocks to the blockchain. The data cannot be changed or rewritten after a transaction has been authorized and added. Because of this, information kept on a blockchain network is said to be “immutable.”

The blockchain just keeps track of all previous transactions that have occurred on its network. For instance, the Ethereum blockchain has a history of all ether transactions. When changes need to be made to the data about a previous transaction, a new record is produced to prevent returning to the original data.

Conclusion

Blockchains play a more prominent role in our daily lives, at work, and in our interactions with digital data. Of course, there is no one set of standards, just as with every other novel, transformative technology, and the full extent of its effects is still being uncovered. But it is undeniably here to stay. And it’s certainly not rocket science.