Blockchain Technology Overview: Understanding the Technology Behind Bitcoins
Bitcoin was born in 2009 and since then, transactions involving this cryptocurrency have evolved in many ways. However, the one thing that remains constant about bitcoin is the secure and interesting technology behind it, which is called Blockchain Technology.
For most people, understanding blockchain technology and other technicalities associated with bitcoins may sound like a challenging task. However, we can always find a wealth of additional info about these topics online to understand all terms and technicalities associated with them.
In this article, I will try to give a quick overview of blockchain technology so that even beginners can somehow understand this broad concept and how it works.
Blockchain Technology: An Introduction
Understanding blockchain technology is rather simple. I mean, it's all in the name. It is called blockchain because the technology is based on chains of blocks, which are clumps or groups of data that provide information about a specific transaction.
There are three major types of data that can be stored in these blocks:
1. Details about a particular transaction like the date, time, and the amount stored.
2. Data and information about participants in the transaction.
3. Data that help to distinguish the participants from each another. These distinguishing features are called the hashes in blockchain technology.
Each block in blockchain technology can hold up to 1MB of data. This may not seem that too huge but it can actually hold thousands of transactions.
The chain word inside the blockchain technology means the linking of all blocks of bitcoins. When any block obtains new data, it is added to the chain. But to be added to the chain, every block has to meet some criteria.
Criteria for adding blocks to the chain
The following are some of the major criteria that need to be fulfilled if the block were to be added to the chain:
1. The transaction needs to happen. Otherwise, the block won’t be added to the chain.
2. The transaction will have to get verified before it is added to the chain.
3. A hash must be given to each block before being added to the chain.
Once a block is added to the chain, it becomes public information -- and thus, anyone can see the transaction details.
What are the qualities of blockchain technology that make it interesting and attractive?
Accurate
You will be amazed to know that thousands of computers are working day and night to verify transactions that can potentially be added to the chain of blocks. Thus, there should be an almost negligible chance of human error when blockchain technology is used, especially for bitcoin transactions. For an error to erupt in the blockchain technology, the same mistake needs to be committed by at least 51% of the computers that are checking the transaction.
Efficient
When you make transactions through traditional routes like banks, there are chances of setbacks. The worst part about the traditional channels is that they have particular working hours, closing hours, and holidays. In stark contrast, blockchain technology works 24/7. Thus, there are no chances of setbacks and delays when using it. Thus, when you are making a bitcoin transaction, it won’t take more than 10 minutes to get the transaction to get completed. In fact, the transactions are also confirmed and secured within just a few hours.
Transparent
Transparency is one of the most important attributes of bitcoin. Although the transactions that you do through the blockchain technology are not anonymous, they are 100% confidential. In fact, all personal information about clients is kept private and no developer can modify the coding of any transaction. Thus, data tampering is impossible when utilizing blockchain technology.
Blockchain technology is the new buzzword -- and its usage for bitcoin is being praised all over the world. These days, investing in bitcoins is easy and secure because it is backed by a foolproof and extremely sophisticated technology like blockchain. Although people are now using this technology in other industries, Blockchain's popularity is still linked strongly to bitcoin transactions.
For most people, understanding blockchain technology and other technicalities associated with bitcoins may sound like a challenging task. However, we can always find a wealth of additional info about these topics online to understand all terms and technicalities associated with them.
In this article, I will try to give a quick overview of blockchain technology so that even beginners can somehow understand this broad concept and how it works.
Blockchain Technology: An Introduction
Understanding blockchain technology is rather simple. I mean, it's all in the name. It is called blockchain because the technology is based on chains of blocks, which are clumps or groups of data that provide information about a specific transaction.
There are three major types of data that can be stored in these blocks:
1. Details about a particular transaction like the date, time, and the amount stored.
2. Data and information about participants in the transaction.
3. Data that help to distinguish the participants from each another. These distinguishing features are called the hashes in blockchain technology.
Each block in blockchain technology can hold up to 1MB of data. This may not seem that too huge but it can actually hold thousands of transactions.
The chain word inside the blockchain technology means the linking of all blocks of bitcoins. When any block obtains new data, it is added to the chain. But to be added to the chain, every block has to meet some criteria.
Criteria for adding blocks to the chain
The following are some of the major criteria that need to be fulfilled if the block were to be added to the chain:
1. The transaction needs to happen. Otherwise, the block won’t be added to the chain.
2. The transaction will have to get verified before it is added to the chain.
3. A hash must be given to each block before being added to the chain.
Once a block is added to the chain, it becomes public information -- and thus, anyone can see the transaction details.
What are the qualities of blockchain technology that make it interesting and attractive?
Accurate
You will be amazed to know that thousands of computers are working day and night to verify transactions that can potentially be added to the chain of blocks. Thus, there should be an almost negligible chance of human error when blockchain technology is used, especially for bitcoin transactions. For an error to erupt in the blockchain technology, the same mistake needs to be committed by at least 51% of the computers that are checking the transaction.
Efficient
When you make transactions through traditional routes like banks, there are chances of setbacks. The worst part about the traditional channels is that they have particular working hours, closing hours, and holidays. In stark contrast, blockchain technology works 24/7. Thus, there are no chances of setbacks and delays when using it. Thus, when you are making a bitcoin transaction, it won’t take more than 10 minutes to get the transaction to get completed. In fact, the transactions are also confirmed and secured within just a few hours.
Transparent
Transparency is one of the most important attributes of bitcoin. Although the transactions that you do through the blockchain technology are not anonymous, they are 100% confidential. In fact, all personal information about clients is kept private and no developer can modify the coding of any transaction. Thus, data tampering is impossible when utilizing blockchain technology.
Blockchain technology is the new buzzword -- and its usage for bitcoin is being praised all over the world. These days, investing in bitcoins is easy and secure because it is backed by a foolproof and extremely sophisticated technology like blockchain. Although people are now using this technology in other industries, Blockchain's popularity is still linked strongly to bitcoin transactions.
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