The term “Blockchain” was invented to signify a new method of looking at the financial system and Internet. According to its founders “will connect people around the world by using real-time digital currencies”. The Blockchains system has two layers: the public and private. The protocol allows users to send, receive , and store money, as well as record transactions and be part of the global money network. The Blockchains can help users save their data on an ledger that tracks both the private and public keys that are associated with a particular account. This allows users to track their balances and manage their money over the internet without the need to be a computer guru.
The reason some refer to Blockchains “digital golds” is due to the fact that it is similar to the gold standard, in that it can help keep track of the gold that has been bought. The difference though is that instead of physical gold, this ledger utilizes digital versions. The ledger allows users to add transactions to and revise them instantly, all done right from the comfort of their desktops, laptops, or even mobile phones. Transactions can be performed within the same network, or between multiple networks. The most appealing aspect of using a ledger is that it gives you a method of making and receiving payments with no need for third-party companies or banks; hence the reason why most businesses use the system.
Another significant characteristic of the Blockchain is its decentralized design. Although the ledger does allow for some blocks to be joined together by a specific computer however, the whole system is made up of a multitude of individual ledgers spread throughout the world. The ledger is extremely low in transaction fees and downtime. The decentralized aspect of the system is what makes it able to handle large volumes of transactions and provide excellent security at the same time. If one computer is damaged the system will shut down and the other computer can perform the required transactions.
The use of hash chain is one of the key features of the Blockchain. A hash chain is simply an accumulation of various transactions that occur in chronological order. At the most fundamental level the transactions occur between nodes on the ledger. Nodes are independent computers that connect to each other using a peer-to peer network protocol. Transactions are triggered by the simple confirmation each computer sends to other computers. The transaction is then added to the chain.
Because the Blockchain relies on a distributed ledger rather than a centralized one it is possible for a number of different chains to be in existence simultaneously. If you’re wondering how it all is working, here’s a breakdown. When a transaction occurs an output is generated by the node to which the transaction is going to be sent to. A second block is then generated, which contains the proof-of work for that transaction.
After two chains are made, transactions occur and are recorded in the ledger. At this moment, the third, or chained together block is made, which adds to the two prior ones. After the last block is made, it’s the entire ledger that is updated. The Blockchain is, in essence is a means to secure the entire ledger so only transactions that are valid can be recorded and verified.
The way the Blockchain works is really quite fascinating. Imagine how the entire planet is interconnected by computers’ networks. They serve as banks by cooperating with each other and processing large-scale transactions. The ledger isn’t dependent on any specific location, and all computers are working together. The beauty of Blockchain is that each transaction is processed in the entire system in a manner that is extremely secure from hacking.
This raises a important question: how can cryptosporters secure the confidentiality of their transactions? Central authority. It ensures that every transaction is handled on each computer. This means that no one can altering the ledger or taking away transactions. This requires cooperation between multiple computers. Hackers are unable to penetrate the system and attack it by compromising the security of cryptography.
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