Basics of Blockchain: Explained in Easy Terms

Blockchain is known as the most disruptive technology in the modern era. Read ahead to gain knowledge about blockchain technology and its basics. 

Blockchain has gained a lot of attention in current times, and also most of the tech giants are eager to utilize this technology in their business. It is, therefore, crucial for people to know the basics of blockchain and its utility. In this article, we will be addressing blockchain basics and a high-level overview of this technology and why it is in such great demand. 

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Introduction

Blockchain can be seen as a platform for decentralized computation and information sharing, which provides an option for multiple authorities to cooperate and coordinate with each other to collaborate to make decisions and work together. Blockchain is a distributed, immutable, indisputable, public ledger. To understand the blockchain basics, you need to know the three main features of blockchain:

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1. Immutability: Immutability refers to the feature that any new block added to the blockchain is referred to as the previous block. This makes a permanent chain of blocks linked with each other. Also, no information present in the blocks can be modified once it is deployed on the blockchain. This maintains the integrity of the blocks and makes it immutable.
2. Verifiability: As the ledger is decentralized, the blockchain has a copy of itself on all the nodes participating in the blockchain network. This makes it possible to verify the transactions easily and securely as there is no single point of failure.
3.  Distributed Consensus: Distributed consensus is a protocol that decides which participant of the node will add the new transaction on the blockchain. As it is a distributed network, if most participants agree, only the proposed transaction is added on the blockchain.

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Must Read: How to Make a Successful Career in Blockchain

Terms Related to Blockchain

There are a lot of terms that are generally used in blockchain technology. It is essential to know these terms to understand the blockchain basics. 

1. Block

Block is the basic structure in a blockchain that holds information and other primary details such as timestamp, the hash of the previous block, the hash of the current block, and further details. 

2. Timestamp

The timestamp is the details of the exact time when the block is created in the blockchain. 

3. Transactions

The transactions refer to the transactional data that has been collected and stored inside the block.

4. Hash

Hash is the cryptographic hash of the block generated by applying an appropriate hash function, chosen for the blockchain, on the data stored in the block.

5. Previous Hash

Previous hash is the hash of the last block, which is used to link the block from the last block present on the blockchain. 

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Read: Blockchain and Its Architecture

Different Types of Blockchain

There are presently three types of blockchains: public blockchains, private blockchains, and consortium blockchains.

1. Public Blockchains

These blockchains store data on a public ledger, which can be viewed by every user on the internet. Users can modify and verify the blocks and then add these blocks on the blockchain. 

2. Private Blockchain

These blockchains are managed by an authority and only verified, and permitted users can access the data on the blockchains. 

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3. Consortium Blockchains

A group of organizations manages these blockchains, and they can only modify the blockchains. 

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General Misconceptions on Blockchain

1. Blockchain and Bitcoin are the same

No, Blockchain is a technology, or rather a platform on which bitcoin functions. Bitcoin is just a use case of blockchain, and there are many other blockchain applications in the industry.

2. Blockchain is a Product

Blockchain is not a product but a system with utility in all the major sectors. Products can be built on blockchain technology with all the requirements for the particular use case.

Why is blockchain important?

It is helpful in the verification and traceability of transactions that are multi-step. It can be useful to provide secure transactions, reduce compliance costs, and speed up the data transfer process.

Another blockchain basics is that it can also be used at voting platforms and to manage titles and deeds. It offers a highly secure feature that is helpful in conducting fraud-free transactions.  It is impossible to corrupt the data in the world of blockchain which results in data security. 

Decentralized systems are also the basics of blockchain, which results in letting go of asking multiple authorities for approval. Blockchain transactions are done with a mutual consensus which results in smoother, safer, and faster transactions. 

The capability of automation is blockchain technology basics, which makes the task much smoother and easier to conduct. Whenever the criteria are met, the system can generate systematic actions, events, and payments.

The top three leading technologies of the blockchain are –

1. Cryptographic keys
2. Shared edger that creates a peer-to-peer network
3.  Means of computing to store the transactions and records of the network 

Bottomline

As widely known, Blockchain is an emerging technology and will find its applications in almost all industries in the future. If you understand the blockchain basics and wish to become a blockchain developer or want to learn more about blockchain to make a career in this field, upGrad, in association with IIITB and IMT, provides several courses on Blockchain for working professionals to learn and upgrade their career. If you are interested in blockchain, you can visit these courses: 

1. Executive Certification in Blockchain from IIITB (upGrad and IIITB)
2. Advanced certificate program in blockchain technology(upGrad and IIITB)