Are you someone who is depressed by the complex mechanism of the bank? Filling out the myriad of paperwork is making you exhausted and eats out a lot of your time. You will encounter the situations in your life when you wish how convenient it would be if you don’t have to seek approval or complete formalities advised by the bank.
Now think of a digital wallet where you can deposit money just like you do in the bank. You can make any transaction through this digital wallet without worrying about any of the previously mentioned problems. How efficient it will be. Here is when blockchain technology comes to play.
In today’s world, people are remarkably technology savvy. They look for ways that could save time and also provide them efficiently. Blockchain is one such technology that could assist people. But for countless people in the world, blockchain is news. Many of us don’t even know its existence. Learning what it can do is the second thing. Through this article, our motive is to familiarise you with blockchain technology.
The History of Blockchain Technology
The idea behind blockchain technology was proposed by David Chaum in the year 1982. But the first blockchain was invented by Satoshi Nakamoto, which was used for Bitcoin.
Blockchain technology is a digital system of recording transactions and then this transaction gets distributed over computer networks. Blockchain technology works on two simple principles that are immutable and disseminated, respectively. Immutable translates to permanent or changeless.
Once your transaction has been recorded, it becomes permanent, unable to make changes. Immutability also suggests accuracy, which means you can rely on these. Once your transaction gets recorded, it will store on several addresses on a computer network. The record-keeping tool is a good metaphor for blockchain technology. To make you understand better, think of a blockchain-like “chain” of “blocks”. All the transactions are grouped and are assigned a block, and then these blocks are recorded in sequence order.
Think of a block like it is the page of your account book. You dedicate pages to a set of transactions. Similarly, a block set of transactions are recorded.
The transactions are recorded with the help of alphabets and numbers and divided by a hash thus, making a chain. These hashes consist of the data from the current and previous transactions. These hashes cannot switch hence, making them immutable. Also, through a consensus mechanism, all the transactions are verified before adding them to a blockchain.
Also, blockchain is highly secure because of its immutable principle, which means once your transaction gets recorded, it becomes permanent. So, even if someone tries to make changes in your records, it remains unchanged.
Types of Blockchains
1. Public blockchains
Public blockchains are the easiest ones to understand. Ethereum and Bitcoin are the two most significant examples of Public blockchains. Everyone is free to request or confirm a transaction that falls under Public blockchains. Public blockchains have a decentralized mechanism.
2. Private Blockchains
Unlike public blockchains, private blockchains imply admittance limitations and are centralized. These blockchains are supervised by an individual or a group of individuals. Hence, one needs to seek permission before confirming a transaction.
3. Hybrid Blockchains
As the name suggests, a Hybrid blockchain is an amalgamation of both private and public blockchains. These blockchains offer better customization by making some of the characters of the firm private and others public.
Sidechain is a type of blockchain that runs identical to the main chain. It gives liberty to its user to transfer assets between two distinct blockchains.
I hope this article gives you a better understanding of blockchain technology.