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What Is Blockchain Technology?

One of the most recent but widely popular terms that you might have heard of over the past few years is Blockchain Technology. But the question arises: What is it, and how is it related to cryptocurrency like Bitcoin?
These are digital assets that are used for recording information that is nearly impossible to change, manipulate, or hack by a system. It’s a structure that stores public transactional records, called “blocks”. These blocks are present in several databases, known as the “chain” in a network which is connected through peer-to-peer nodes. This kind of storage is mentioned as a digital ledger. To authenticate the process, the transaction of each ledger is authorized by the owner’s digital signature to safeguard it from tampering. It can record information about cryptocurrency transactions, DeFi smart contacts, and NFTs ownerships.

How Does Blockchain Technology Work?

blockchain-technology
The underlying mechanism of this business network is complex, but the basic working is in the following steps
This technology has the potential to streamline processes and serve many different purposes in different industries. It can be used everywhere, from providing financial services to banking and assets transfer. Some of the uses of this technology are listed below

Metaverse Platform

It serves as a foundation of the metaverse platform by guaranteeing secure ownership of digital assets and communicating and sharing the data. The trading of assets also opens economic opportunities.

Supply Chain Industry

It is used in logistic companies and supply chain industries to track shipments in real time and reduce errors to increase transparency.

Healthcare Industry

Used in the healthcare system for maintaining medical records, securing patient data, and streamlining the process of billing and claims.

Minting

It provides the minting of Non-Fungible Token by transferring digital art, which is very popular with Non-Fungible Tokens.

Banking Industry

Used to process transactions of flat currency (euros or dollars) in banking. The process is faster than sending money through the bank.

Types Of Blockchain Networks

types-of-Block-Chain

Public Networks

This does not ask for permission and allows everyone to join and participate. The members here have equal rights to read, edit, and validate this record-keeping system. It helps to eliminate security flaws and centralization. With its distributed ledger technology (DLT), it can distribute data across a peer-to-peer network rather than being stored in a single location. It is used to exchange and mine cryptocurrencies like Bitcoin, Ethereum, and Litecoin.

Private Networks

These are also called managed blockchains. Operated on closed networks, they tend to work well for private businesses and organizations because the members and the rights of working in the network are determined by the authorities. These are partially decentralized because of access restrictions.

Hybrid Networks

These are also called Permissioned Networks, which are private record-keeping systems that allow special access for authorized individuals. These are set to combine elements from both private and public networks by setting up a private, permission-based system alongside a public system.

Consortium Networks

It’s similar to a hybrid network, but multiple organizations will manage a single consortium blockchain. They are initially difficult to set up, but once they start running, they offer better security. It is preferred in Industries where many organizations have common goals and benefit from shared responsibility.

Frequently Asked Questions

What Are The Features Of Blockchain Technology?

Keeping a record of data and transactions is very crucial as a part of any business. This technology gives the biggest advantage of keeping the data safe and secure. The transaction takes only a few minutes, making the process quick, convenient, and accessible. Some of the features of this kind of business network include

  • The feature of electronic signature offers fraud-free transactions, making it highly secure.
  • The digital transformation of this technology provides a decentralized system that has bypassed the conventional practice of getting approval from regulatory authorities for transactions. Here, the transactions are done with the mutual consensus of users.
  • It comes with automation capability as it is programmable and can generate systemic actions, events, and payments.
  • It has eliminated the need for third parties, so there is no need for intermediaries. This also saves the cost of paying for intermediaries.
  • It also deters the participants from exerting authority or control over one another.
What Are The Key Components Of Blockchain Technology?

The architecture of smart contracts works with the combination of three leading technologies, which include:

Distributed Ledger

It's a shared database in the blockchain network that works by storing the transactions that can be edited by everyone on the team. Though it can be edited, it has strict rules of who can edit and how they can edit it. Once the entries are recorded, they cannot be deleted.

Smart Contracts

These are used to self-manage business contracts without the need for an assisting third party. And run automatically when predetermined conditions are met. They define conditions for corporate bond transfers, including terms for travel insurance to be paid and others.

Public Key Cryptography

The cryptography keys help perform the transactions successfully between the two parties. There are two keys (private key and public key) for each individual, which they can use to create the most important aspect of their transaction: a secure digital identity. This identity is referred to as their electronic credential or signature, which is used to authorize and control transactions for their digital assets.

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