How does blockchain technology work?
What is Blockchain?
Blockchain definition
Reduces third-party intermediaries
Blockchain is defined as a securely shared decentralized ledger of data. Blockchain technology allows a common group of participants to share data. With blockchain cloud services, transaction data from multiple sources can be easily collected, integrated, and shared. Data is divided into shared blocks that are chained with unique identifiers in the form of cryptographic hashes.
Blockchain eliminates data duplication and increases security by ensuring data integrity through a single source of truth.
In a blockchain system, forgery and data tampering are prevented as data cannot be changed without the agreement of all parties. A blockchain ledger can be shared but cannot be changed. If someone tries to change the data, all participants will be alerted and it will be known who made the attempt.
How does blockchain technology work?
Think of the blockchain as a historical record of transactions. Each block is serially "chained" to the previous block and recorded in an immutable record in a peer-to-peer network. Cryptographic trust and assurance technology applies a unique identifier, or digital fingerprint, to each transaction.
Trust, responsibility, transparency and security are integral elements of the chain. This way, many types of organizations and commercial partners can access and share data. This phenomenon; The third party is known as consensual trust.
All participants maintain an encrypted record of each transaction with a decentralized, highly scalable, durable and inviolable recording mechanism. Blockchain requires no additional overhead or intermediaries. Having a decentralized, single source of truth reduces the cost of conducting trustworthy business interactions between parties that do not fully trust each other. Permission-resistant blockchain solutions preferred by many organizations allow participants to participate in the network, and each participant keeps an encrypted record of every transaction.
Any company or group of companies that needs a secure, real-time, shareable record of transactions can benefit from this unique technology. Storing everything in multiple locations provides better security and accessibility by eliminating the central point of vulnerability.
To learn more about blockchain, its underlying technology, and use cases, here are some important definitions.
Decentralized trust:
The main reason why organizations use blockchain technology instead of other data stores is to guarantee data integrity without relying on a central authority. This is called decentralized trust through trusted data.
Blockchain blocks:
The name block chain comes from the fact that data is stored in blocks, and each block is linked to the previous block, creating a chain-like structure. Thanks to blockchain technology, you can only append (append) new blocks to a blockchain. You cannot change or delete a block added to the blockchain.
Consensus algorithms:
Algorithms that enforce rules in a blockchain system. Once the participating parties create rules for the blockchain, the consensus algorithm ensures that these rules are enforced.
Blockchain nodes:
Blocks of data in the blockchain are stored in nodes. These storage units allow data to be synchronized or kept up to date. Each node can quickly determine whether a block has been modified since it was added. When a new full node joins the blockchain network, it downloads a copy of all blocks present in the chain. Once the new node is synchronized with other nodes and has the latest blockchain version, it can receive all new blocks just like any other node.
There are two main types of blockchain nodes:
Full nodes store a complete copy of the blockchain.
Lightweight nodes only store the latest blocks and may want to retrieve older blocks that users need.
Three types of blockchains
Public blockchain.
Anyone can participate in the public, permissionless blockchain network without restrictions. Many types of cryptocurrencies operate on public blockchains based on rules or consensus algorithms.
Permission-based or private blockchain.
Private or permission-based blockchain allows organizations to control who can access blockchain data. Only permitted users can access certain data sets. Oracle Blockchain Platform is a permission-based blockchain.
Federated or consortium blockchain.
Blockchain network in which the consensus process (mining process) is closely controlled by a pre-selected group of nodes or a pre-selected set of stakeholders.
Benefits of blockchain - Business value
The use of blockchain technology is expected to increase significantly in the coming years. This game-changing technology is both innovative and revolutionary. Block
