What Is Blockchain Technology? How Does It Work?
Technologies have acquired the world with their incredibly smart solutions. We cannot deny the fact, nowadays life is more secure, comfortable and fast because of technology. Also, if we would define this era as Technology-Driven, it will not be wrong.
In the same context, today we will discuss the most demanding technology that is Blockchain. We all are quite aware of the concept of Cryptocurrency or NFT. These concepts are built using blockchain technology.
Hence if you are looking to enhance your knowledge about what is blockchain technology, this content will be very helpful. Also, Linearloop is one of the leading blockchain development companies in India and USA and our services are dynamically performing across the world.
What is blockchain technology?
The way cryptocurrency is spread in the market, people are just going crazy. They are curious to know about the technology behind this amazing concept. So many of us are already aware, blockchain technology is behind all the concepts like bitcoin, NFT, etc.
Basically, blockchain is a distributed database and is shared between the node of the computer network. Also, it is a digital ledger that keeps a record of all the transactions.
If we talk about its works, each block of the chain contains information about the number of transactions corresponding to the participant’s ledger.
Further, the technology gains favor because it has made hacking impossible. Information is stored in the system but there is minimal or no possibility of cheating. Even leading corporates choose blockchain in order to maintain the highest possible security of their products.
This is the reason there is massive growth in blockchain developers in India because people have realized the potential of the technology.
What is the difference between a standard database and a blockchain?
If you are in the technical field, you must be knowing that the standard database stores all information in tabular form. In the case of blockchain, information is stored in chunks that we call blocks and once a block is filled, the information is passed to the next block and so on.
Each block has a certain storage capacity. Because of such functioning, the term Blockchain is given to the concept.
Use of blockchain technology
Essentially, blockchain is used to maintain a transparent ledger system. With the evolution of blockchain, information systems got the safest way to manage all the tractions going on in the digital space. Various use of blockchain technology includes:
- Fund transfer and processing of payment
- Monitoring of supply chains
- Maintaining digital IDs
- Data sharing with security
- Loyalty and copyright protection
- Immutable data backup
- Medical records management
- Tracking of weapons
- Equity trading
- IoT (Internet of things) management
How Does Blockchain Work?
Before knowing the working of blockchain, you must be aware of its architecture. The architectural approach will help you understand the functional flow in a better way.
The architecture of blockchain:
As we have stated above, the information is kept in a block. So, the first block of a blockchain is known as the “Genesis” block. Each block of the chain is connected to the next.
The data stored in the block is dependent upon the type of blockchain. You can understand it with a reference. A bitcoin block will store the information about the buyer, sender, and number of transferred bitcoins.
Let’s explore SHA256 — Hash
Hash can be understood as a fingerprint that is unique to each block. This acts as an identifier and is always kept unique same as a fingerprint. If any information in the block is changed, the hash will be updated immediately. Because of this concept, blockchain is highly secure.
A block of the blockchain contains 3 major elements:
- Data
- Hash of the previous block
- Current Hash
Working of blockchain transactions:
Now coming back to the point how does blockchain work?
- In the very first step, the user requests a transaction. This can be in the form of contracts, records, cryptocurrency, or any other information.
- Now in the second step, with the help of nodes, the requested transaction is broadcasted to the P2P network.
- In step 3, with the help of algorithms, the network’s node validated the status of the user along with the transaction.
- After completion of the above steps, a new block is further added to the chain. This is the last step of the process.
Versions of Blockchain technology
Technology keeps evolving and with time, upgraded versions are launched. In the same way, blockchain has some versions. And being a well-known blockchain developer in India we will let you know about the same.
Blockchain 1.0: Currency:
This was the first stage or first version of blockchain that is used for payments and currency. Bitcoins are a well-known example of this version.
Blockchain 2.0: Smart Contracts
Version 2.0 is launched with one key concept of Smart Contracts. They are small computer-based programs that execute automatically. Further, they check conditions like enforcement, verification, and facilitation.
Blockchain 3.0: DApps
This version is available with DApps and D represents the decentralized application. Also, DApps contain frontend blockchain example code UI written in any programming language that further enables the system to communicate with the backend.
It is the same as traditional applications.
Pros and Cons of Blockchain
Benefits of Blockchains
Technology needs security because no one prefers to compromise the user’s privacy. Blockchain offers maximum possible security and removes all the scope of hacking or cheating. This is the biggest advantage of blockchain.
Further, let’s explore the benefits of blockchain technology in a defined manner:
Saves time for finance settlement: In the financial sector, funds settlement is the biggest challenge for always. But blockchain has the power to execute the process in a prominent way that saves lots of time as well as effort.
There are no lengthy verification processes and clearance etc. Here you will get a quicker trade settlement.
Reliable: Blockchain technology is reliable because it verifies and certifies the identity of the genuine participants. IT further eliminates the double records as a result of which transaction accelerates.
Scam prevention: The concept eliminates the scope of fraud by implementing the concept of Hash and blocks. With blockchain technology, the transfer of funds is always secure. Further, it maintains complete transparency of all the transactions.
Facilitate collaboration: Blockchain allows users to transact directly without any involvement of a third party. This is the biggest relief and plus point of the system.
Conclusion
Linearloop is an established IT company in India and we have expert blockchain developers. We have executed many projects in the Indian and International markets.
If we say, we are a preferable blockchain developer company in India for all our clients, we will not be wrong.
So, if you are looking to know any further information regarding the blockchain development process or blockchain technology, feel free to connect. We are here to take your queries.
