what is blockchain?
WHAT IS BLOCKCHAIN?
Blockchain refers to the technological infrastructure and protocols that allow simultaneous access, validation, and record updating in an immutable manner across a network spread across multiple entities or locations.
In an overly simplified analogy for understanding blockchain is Google Doc. When we create a document and share it with a group of people, it is not copied or transferred. Instead, the document is distributed to everyone giving everyone access to it simultaneously. Everyone with access can see the changes made by anyone. Making changes to it is entirely transparent.
Of course, blockchain is more complicated than this, but the analogy is apt because it illustrates three key features of blockchain technology:
Before the invention of Blockchain and BitTorrent, we were only familiar with centralised services. A central entity will control the flow of all information in the network, and to access it, we would need to interact with it.
An example of a centralised system is the banking system, where we don’t have much control over our money because you can only make digital payments through the banks. However, a decentralised system allows you to securely create digital transactions with another user without a bank.
This feature opened the gateway for cryptocurrencies to enter the financial world. The transparency of the Blockchain network makes it more vital.
The common confusion about blockchain is transparency and privacy. Let’s try to address this.
The transparency feature allows everyone to see the transactions in the network. However, with cryptographic identity, the person’s real identity remains private and anonymous.
This means the transaction is transparent to everyone. Still, the identity of the person requesting the transaction remains private (You will see the public address of the person instead of their name).
Once validated, anything created into the blockchain network cannot be tamper with, and the records are permanent. Why does it matter?
With immutability, it guarantees an application’s complete history and data trail. The chain’s integrity can be validated at any time by simply re-calculating the block hashes. Organisations and industry regulators can quickly detect fraud when a discrepancy between a block data and its corresponding hash.
Blockchain has gained lots of traction because of its decentralised system, as it does not allow any hackers to corrupt the network. In the next part of our blockchain series, we will look at “How does blockchain work?”
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