What is Blockchain Technology?

What is blockchain?

A blockchain (simply put “chain of blocks”) is a distributed database, which can be accessed by anyone. It is otherwise called “distributed ledger technology” since there is no centralized body or regulator able to manage a blockchain at its own discretion.

 

What is the difference between a blockchain and a classical database?

A classical database is stored on dedicated servers which are controlled by a company, owner of that particular database. A blockchain is not controlled by any single person or agency, and its security is ensured through its distributed architecture. In case when part of the computers on which a blockchain is stored is hacked, the entire system functioning will not be anyhow affected. This is an advantage implausible for any classical database.

 

How does a blockchain work?

Theoretically, any data can be recorded into a blockchain ledger, starting with money transactions and finishing with the complete works of world literature. To enter data into a blockchain ledger, it has to be verified or checked for validity. So-called miners are engaged in this process in the case of Bitcoin and money transfer services. After having checked the transaction validity, they record it into a block, and it remains in a blockchain ever after, providing anyone with the possibility to check its validity. Additionally, any such transaction should be confirmed by several independent sources before it is considered to be valid.

 

Where is a blockchain kept?

A blockchain can be stored anywhere, and it is stored everywhere. Dedicated network nodes store the full blockchain current version while all the other remaining nodes simply refer to them when it is necessary to check something. You can download the complete blockchain ledger from open sources, and you will keep it then.

 

Why is a blockchain surrounded with so much buzz?

Blockchain technology is often compared to the Internet because it is really able to change the world. Nowadays, people have to keep a huge staff of lawyers, notary officers, regulators, bankers, and other bureaucrats to certify and confirm any events, say, wages payments or apartment sale. Blockchain technology is capable of performing all the necessary operations in a completely automated mode, eliminating the very necessity for intermediaries.

 

Where is blockchain technology currently used?

Blockchain technology is used to manage practically any cryptocurrency, ensuring its operation. In several countries around the world, blockchain technology is also being actively introduced into banking systems, property rights registration systems, and various public registries. Tunisia switched a digital version of its national currency to use a blockchain.

 

What is the difference between an open and private blockchain?

An open blockchain can be accessed by everyone, and a private one is available exclusively for those who have the right to access it. A lot of different blockchain ledgers can exist, some of which are open and others are closed. They cannot anyhow interact for the time being since it is possible to set specific operation rules in each blockchain system. Furthermore, the rules of a curtain blockchain ledger can directly contradict the rules of another one.

 

How is it possible to make several blockchain ledgers interact?

A variety of ways are offered to solve this problem. The most popular of them are the so-called side chains – special blockchains necessary exclusively for bypassing the possible contradictions between several blockchain systems running under different rules.

Read more on Blockchain:

What is Blockchain Technology?

How Does Blockchain Technology Work?

Blockchain: its Prospects and Share Economy

Blockchain and World Regulators

Public Blockchain and Private Blockchain

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