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What is Blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
It is an electronic coin as a chain of digital signatures. Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin.
How the Network Works
The steps to run the network are as follows:
- New transactions are broadcast to all nodes.
- Each node collects new transactions into a block.
- Each node works on finding a difficult proof-of-work for its block.
- When a node finds a proof-of-work, it broadcasts the block to all nodes.
- Nodes accept the block only if all transactions in it are valid and not already spent.
- Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
Key Features
Security
It uses a digital signature feature to conduct fraud-free transactions making it impossible to corrupt or change the data of an individual by the other users without a specific digital signature.
Decentralized System
Conventionally, you need the approval of regulatory authorities like a government or bank for transactions; however, with Blockchain, transactions are done with the mutual consensus of users resulting in smoother, safer, and faster transactions.
Automation Capability
It is programmable and can generate systematic actions, events, and payments automatically when the criteria of the trigger are met.
Blockchain, Digital Currency, Cryptocurrency and Bitcoin
The terms blockchain, cryptocurrency and Bitcoin are frequently lumped together, along with digital currency; sometimes they’re erroneously used interchangeably. Although they’re all under the umbrella of distributed ledger technology, each one is a distinct entity.
Blockchain
Blockchain is the technology; more specifically, it’s the technology that constructs a decentralized digital ledger that enables exchanges between multiple parties in a secure, immutable manner.
Digital Currency
Digital currency refers to any form of currency that is available only in digital or electronic form and shared without an intermediary. This includes digital money issued by governments and central banks as well as cryptocurrency. Digital currency is sometimes called digital money, electronic money, electronic currency or cyber cash.
Cryptocurrency
Cryptocurrency is a digital asset that can be exchanged on a blockchain network. It is a subset of digital currency. It is not issued by government entities. Think of cryptocurrency as tokens issued by private entities or groups that can be used to pay for items sold by those who also operate in the blockchain network.
Bitcoin
Bitcoin is the first cryptocurrency and still the most famous example. As of May 2021, market research website CoinMarketCap listed 4,993 different publicly traded cryptocurrencies.
Originally published on Medium: Blockchain