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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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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- 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.
- 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.
- 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.
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.
The timestamp is the details of the exact time when the block is created in the blockchain.
The transactions refer to the transactional data that has been collected and stored inside the block.
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 –
- Cryptographic keys
- Shared edger that creates a peer-to-peer network
- Means of computing to store the transactions and records of the network
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:
- Executive Certification in Blockchain from IIITB (upGrad and IIITB)
- Advanced certificate program in blockchain technology(upGrad and IIITB)
What are the features of blockchain?
Blockchain’s popularity is increasing in the current market scenario. It has some distinguishable features like immutability, meaning that it can’t be altered or corrupted. The second feature is the decentralized network of blockchain which makes it easier to access and gives one direct control over their digital assets. Another feature of blockchain is the enhanced security that it provides. Because of hashed cryptography, the true nature of the data is hidden by the network, making it secure and extremely difficult to be breached. One more attribute is its fast process, which saves a lot of time and helps in faster transactions.
What are the best blockchain platforms?
There are a number of blockchain platforms one can choose from. Depending on the requirements and feasibility of the sector, one can choose Bitcoin, IBM Blockchain, Ripple, Chainalysis KYT, Ethereum, Stellar, Microsoft Azure Blockchain, Quorum, or any other blockchain platform with a good rating and which suits the needs of the user. Different blockchains provide different functions and have their own advantages and drawbacks. It is better to explore and get an exact idea of these platforms before choosing an option.
What are the benefits of using blockchains?
Blockchain applications verify digital signature and authenticity of every block of information by using a decentralised network, which minimizes the chances of fraudulent transactions and unnecessary spending. Blockchains are easily accessible, accountable and transparent records that one can rely on. There are multiple sectors in which blockchains can be used like healthcare, banking, finance, telecommunications etc. The current market scenario is seeing a rise in careers and opportunities related to blockchains and blockchain technology.
What is the most popular feature in blockchain?
The most popular feature in the blockchain are Miners, Decentralisation, Hash encryption, and Transparency.
What are the main components of blockchain?
The main components of the blockchain are Blocks, Nodes, Nonce, Hashes, and Ledger.
What is the biggest trend in blockchain?
The year 2023 is seeing the trend of enterprise operations that are relying on blockchain technology. As the technology has to offer transparency, security, protection from cyber attacks, etc.