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What is Blockchain and How does blockchain work?

What is blockchain? It is a virtual ledger that records transactions between two parties efficiently and in a verifiable & permanent way.

Before going into our topic, I will give a brief introduction of myself. I’m a web programmer having more than eight years of professional experience working with all major PHP platforms like WordPress, Codeigniter, Shopify, and Laravel. I own an IT services company Nexbloke having a team of 25 expert developers, designers, and SEO specialists.

We built an efficient online tools base site Yooimage.com dedicatedly focused on image manipulation tools. Our first tool was an Image compressor which is used to compress your PNG, JPG, GIF, and WEBP images and decrease images’ size up to 60%. It is a very essential tool for web developers to optimize site speed and SEO ranking. Another tool that we provide is an Image resizer which is used to resize images to the desired size. Simple design, free and fast processing made, Yooimage one of the top tools providing sites.

What is block chain & how does it works?

What is Blockchain?

Blockchain is an unchangeable and shared digital ledger that is used to store information and track transactions and other digital assets. Blockchain stores information electronically in digital format which can’t be altered. It is most commonly known for its crucial role in cryptocurrency which makes crypto secure and decentralized.

The main difference between traditional databases and blockchain is that in blockchain data is stored in blocks with limited storage and when a block filled with information is closed and linked to previous blocks, these blocks are then closed permanently and can never be changed.

What is decentralized storage?

The best example to understand decentralized storage is Google Sheets, where one sheet is shared with multiple people at the same time and that sheet is not copied or transferred to other people. That sheet has just one copy and multiple people can access it.

In this decentralized distribution of data, everyone can access data at the same time and this method of sharing is much faster than transferring data from one person to another. Changes in decentralized data are stored in real-time which makes it transparent. Obviously, blockchain is more complicated than a Google Sheet.

How does Blockchain work?

The main purpose of blockchain is to make digital data distribution available on a wide scale in a secure way. Blockchain is mainly known for its use in cryptocurrency. It makes crypto transactions secure. Each transaction that occurs on the crypto blockchain is stored in a block. This block contains information about transactions like sender and receiver etc.  

When a block is filled with transaction information it then closes and links with the previous closed block. This process of filling and linking blocks continues on each transaction and creates a chain, that’s why it is called a chain. These blocks remain closed forever and can never be altered.

How does Blockchain work?

Blockchain consists of three key concepts:

1) Blocks:

Blocks are storage spaces that make a chain. Data goes in these blocks. When a block is created a 32-bit whole number is generated which is called the nonce. Then this nonce generates a 256-bit number called the hash.

2) Miners:

Miners create these data blocks with a process called mining. With mining miners create blocks with unique nonce and hash. Hash connects new blocks to previously created blocks. This process becomes really difficult when we work on large chains like bitcoin.
Miners use a special kind of software and hardware for mining. The quality of hardware depends on the mining assets. For example, mining bitcoin is more difficult than mining some other low-value bitcoin as bitcoin has the largest chain of blocks.

3) Nodes?

Nodes can be any kind of electronic device that manages copies of blockchain that help this network to work properly. Every node has its own copy of the blockchain.

Start of Blockchain: Crypto-currencies

Blockchain became popular because of its use in digital currencies or crypto in general. Crypto is a digital currency that doesn’t have a physical presence and can be transferred on a blockchain. Popular cryptocurrencies are bitcoin, Ethereum, and bitcoin. Cryptocurrencies are highly secured because of blockchain. All transactions performed on crypto are recorded from the first seller to the current buyer.

In this modern time, crypto-currencies have become a really hot topic. There are roughly 7000 different cryptocurrencies or tokens available right now. Crypto is mostly used for trading rather than buying goods. Crypto Trading has become a major source of income for many individuals. It is ten times riskier than stock trading which is also a fact.

Despite this risk matter, more and more large corporations are coming into crypto. Most is Tesla who has around $1.5 billion invested in crypto mainly in bitcoin. Majority of people around 90% of traders lose their money in crypto but there are some stories of speculators who become rich trading crypto.

Start of Blockchain: Crypto-currencies

Benefits of Blockchain:

Blockchain comes with many benefits which makes it an essential way of transferring data. I’m mentioning a few of these benefits below:

Transparency: 

The decentralized nature of blockchain makes it the most suitable way of transferring information. As we discussed earlier, blockchain is derived from a chain of blocks. These blocks store data of each transaction. Block also contains information of owners every time it transfers to a new owner. This means if you buy a crypto coin, that coin contains information of all its owners from the first owner to now you.

Secure: 

Blockchain enhances the way of storing information which is more secure than other platforms. Each node of a blockchain network contains a copy of the information. When a transaction happens all copies of information are changed on nodes means if any malicious activity happens all of the nodes will reject it.

Cost-effective: 

To start I explain blockchain with an example of Google Sheet, keep that example in mind, and think again, what happens if we make a copy of information every time we share information with a person? Will that be a good option? Your answer would be no. This method will put a huge load on the server and as result, we’ll buy more storage.

Conclusion:

There are legitimate concerns against the blockchain. Whether you like it or not, we can’t ignore the impact it has on the way of transferring information today. It revolutionized our information storing and transferring system. Made it more secure, transparent, and cost-effective.
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