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Home General Knowledge

What is Blockchain Technology? An Easy Guide for Beginners

by Naba Shebint
August 24, 2021
in General Knowledge
blockchain technology
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Table of Contents

  • 3 Pillars of Blockchain Technology
  • Technologies behind Blockchain Technology

Block chains are very popular nowadays. What is blockchain? What are its properties? How does it work? How can it be used? Why is this technology said to be a revolution in the internet world? Candidates who are preparing for competitive exams like PSC, SSC, RRB, Banking should be aware of current affairs and general knowledge in order to crack the examination successfully. Let’s have a deep understanding on this very relevant topic which are expected to come on competitive exams.

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What is Blockchain?

A blockchain is a time-stamped series of immutable record of data that is managed by a cluster of computers not owned by any single entity. To understand block chain we need to understand Cryptography and Distributed ledger.

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Cryptography:It is a method of protecting information and communications through the use of codes so that only those for whom the information is intended can read and process it.

Ledger:It is a kind of database where confirmed transactions are recorded.

Distributed Ledger Technology:It is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time.Unlike traditional databases,distributed ledgers have no central data store or administration functionality.

Now we can define a block chain as a growing list of records,called blocks,that are linked using cryptography.Each block contains a cryptographic hash of the previous block,a timestamp and transaction data.Through a block chain,a digital information is being distributed instead of just copying.This technology was originally devised for the digital currency,Bitcoin.But now the tech community is about to explore its immense scope and potential uses.

“The block chain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value”.-Don & Alex Tapscott,Authors Blockchain Revolution (2016).

PROPERTIES

  • In a block chain each of the blocks of data (i.e.block)are secured and bound to each other using Cryptographic principles(I,e.chain).
  • The block chain network has no central authority.
  • The information in a block chain is open for anyone and everyone to see.
  • Everyone involved in the block chain is accountable for their actions.
  • A blockchain carries no transaction cost
  • Pass information in a fully automated and safe manner.
  • Not just information,but anything of value-money,deeds,identities,even votes-can be moved,stored and managed securely and privately  through blockchain technology.
  • Trust is established through mass collaboration and clever code.
  • No role for any intermediaries like governments or banks.
  • Brings everyone to the highest degree of accountability.
  • Guarantee the validity of a transaction by recording it not only on the main register,but a connected distributed system of registers,all of which are connected through a secure validation mechanism.

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    Blockchain technology was invented by Satoshi Nakamoto In 2008 as a public transaction ledger of cryptocurrency bitcoin.Thus the users were allowed to control their own money without a third party to access or monitor it.Though the possibility of the blockchain technology was limited in the bitcoin application at the time of its invention,later the technology world explored its many different potential uses in a variety of applications like security,online voting etc.

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    3 Pillars of Blockchain Technology

    What is so special about block chain? Let’s look at the three main reasons why block chain technology stands to revolutionize the way we interact with each other.There are three main properties which attracted  a widespread acclaim to this technology and in fact they are considered to be the pillars of block chain technology.They are,

    • Decentralization
    • Transparency
    • Immutability

    Decentralization

    We are more used to centralized services.That is,we have to interact solely with a centralized entity which stored all the data to get whatever information we required.The best example for a centralized system is Banks.In other way we can say that we have been following a client-server model where all the data is stored in one spot.

    But what if this centralized entity somehow shutdown or gets corrupted?How can we blindly depend a centralized entity?

    In a decentralized system,instead of an information being stored by one single entity everyone in the network owns the information.

    Transparency

    A person’s real identity is not being revealed.It is hidden by complex cryptography and he will be represented with a public address.

    Immutability

    A block chain has the ability to remain unchanged,unaltered and indelible.

    Technologies behind Blockchain Technology

    1. Private key cryptography
    2. P2P network
    3. Program(the block chains protocol)

    Blockchain technology is expected to be applied in the following areas in the future.

      • Smart contracts
      • Supply chain management
      • Asset protection
      • Personal identification
      • Payment processing
      • Crowdfunding

    Conclusion

    The ultimate result of blockchain technology is definitely a secure way of transactions.We can proudly hope that our financial and technological future is going to make use of the benefits of this revolutionary invention. Let society get decentralized and free from the control of corporate intermediaries.

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    Naba Shebint

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