What is blockchain technology and how does it work?

Introduction of blockchain technology.

Today’s era has undoubtedly established itself as ‘tech-savvy’ and as a proponent of technology. Doesn’t matter where we go or what we do, we are always connected to the technology and by the technology. No wonders, technology has birthed miracles into human lives, which resulted not only in making our life easier but also brought a positive paradigm shift. Today, we cannot think about life without technology.

Out of various wonders, the one we want to talk about today is a technology that has changed our course of actions or response in context to situations/ tasks which require/ involve transparency, data storage, banking and cryptocurrencies etc., . This technology is called- ‘Blockchain Technology’.

What is Blockchain or Blockchain Technology?

The word blockchain technology has been around for a while now and sounds rather complex, but in reality, it is a very simple technology. In simpler terms, Blockchain– which is sometimes referred to as ‘Distribution Ledger Technology (DLT)’ is essentially a database or a digital ledger that works on the principles of decentralization and cryptographic hashing.

Blockchain Technology (a peer-to-peer technology) records information and tracks assets in such a way that the data or the information becomes immutable, hack-proof, transparent and generates smart contracts.

Blockchain is different from any typical or traditional database solely due to the method it uses for storage. Blockchain stores data in ‘chained boxes’. Each block in the chain contains several transactions and when new information is given out, a new block of information is created and a record of that transaction is added and spread out to all the connected computers/ communication networks/ participant’s ledger throughout the globe.

This block is then added to the existing chain, this chain is irreversible, hence creating a blockchain. The communication networks created in blockchain technology are real-time and completely secure. Since the database is managed by multiple participants, it is known as-Distribution Ledger Technology.

It means if someone tampers with one block, it would immediately become apparent to all the connected nodes/ computers throughout the globe and the fraud could be prevented easily.

How does blockchain technology work?

Now, that we have understood the basic concept behind blockchain technology, we would try to put out efforts towards the question- How does blockchain technology work? We, through this blog, have tried to simplify it, and hope that it would enhance your knowledge.

There are three basic concepts that work behind the principles of blockchain technology.