In today’s world’s new and modern era, cryptocurrency is used in many countries for different purposes. People use it on a broad scale, but despite this fact, a question that arises in several people’s minds is who drives this digital system of currency so well. Is there a database or an operating system? What makes it so easy for everyone to access data at any time and is not allowed to change the stored data?
The answer is simple! Blockchain technology allows these cryptocurrencies, such as the Bitcoin Trading bot, to work efficiently in a meaningful manner, especially in the present online world. This article will proceed to have an aspect at a detailed overview of what is Blockchain technology.
Blockchain technology is an unchangeable ledger that constitutes a record of digital assets that can coordinate among connected computers networks.
The blockchain assets include any property, copyrights, cash, house, brandings, documents, etc. Any investment made on a blockchain network can be tracked and traded safely by reducing the number of risks.
How does it work?
Blockchain works on the concept that includes three main elements, which are:
Multiple blocks are present in a single chain, and three additional units are currently in a single block.
- DATA- which is present in the block.
- NONCE- is a 32-bit number. When the block is generated, the nonce is erratically generated.
- HASH- a 256-bit number. It is generated after a nonce. Vast numbers of zeros must be present in its start.
Mining refers to a process in which the miners are charged to create new blocks on the chain. Adding the data on the block is done when miners find the solution to different complicated mathematical problems.
Nodes are any electronic device that binds the networks together by connecting them to the chain. All the blocks of the chain are linked with one another with the help of nodes.
Millions of consensus methods are essential aspects of blockchain as they tell how efficient, rapid, and safe a transaction is.
Some important consensus algorithm methods are:
- Proof-of-Stake (PoS)
- Proof-of-Work (PoW)
- Delegated Proof-of-Stake (DPoS)
- Practical Byzantine Fault Tolerance (PBFT)
Blockchain technology is not only a single word providing everything, but also, it can be divided into further types. The main types of blockchain technology are:
1. Public blockchain:
A public blockchain is allowed for public access which means, anyone can take part in it to validate or request a transaction. It is a localized network of computers that makes the information of transactions available for everyone.
The efficiency of Public blockchain is lower than other blockchains; also, there is no centralization in this type. Moreover, this technology is permission-based, and the immutability of this blockchain is completely tamper-proof.
Examples are Bitcoin, Ethereum.
2. Private blockchain:
Private technology is allowed for personal use only having access restrictions for the public. The set of nodes in the blockchain determines who can use this network. The efficiency of a private blockchain is higher than the public one; also, it is centralized in its process.
These permission-based networks consist of the data present, which is not entirely tamper-proof. Hyperledger is one of its examples.
3. Consortium blockchain:
Consortium blockchain, also known as Federated blockchain, includes public and private networks by adding their best characteristics. This type of blockchain technology has high efficiency and can be used by selected nodes. The Partial centralization in this blockchain helps different members of organizations to cooperate on the network.
Dragonchain is an excellent example of it.
4. Hybrid blockchain:
Hybrid Blockchain is formed by combining features of both public and private blockchains.
The permission-based and permissionless network is present in hybrid blockchain, making it a rapid and high-efficiency network. Privacy can be maintained, but a third party can also use data.
Securing data by blockchain:
The decentralization character of this blockchain makes it more secure by not allowing third parties. The computer verifies the transaction that occurred before when a new block is added. Each previous block is the source of information for the new forming block. So, different outsource blocks can’t be added to it and lessen the risk of data hacking or cheating.
- Rapid transactions are allowed to be made by this technology.
- Blockchain technology reduces your cost during transactions.
- Security is provided by blockchain technology, and your data cannot be changed or deleted.