No matter you are an investor in cryptocurrency or not, you may hear about blockchain. But what is it? Blockchain is a technology bought by Bitcoin, the first and most popular cryptocurrency. However, more than a base of cryptocurrency, blockchain can be applied to many other aspects.
Blockchain technology utilizes blocks and chains data structure to verify and store data, generates and updates data by distributed nodes with consensus algorithms, guarantees the security of data transfer and assess through cryptography, and uses smart contracts, which consists of automation scripts and codes, to maintain the database.
In general, blockchain is a combination of data structure, cryptography, consensus mechanism and distributed ledger.
6 Key Features of Blockchain
Decentralization is the core feature of blockchain. Based on the distributed ledger system and P2P technology, every node in the blockchain is equal. And according to the consensus mechanism, all nodes devote to data storage, record and update.
In society, an intermediary agent is always considered as the trusted 3rd-party and indispensable in a trade. With blockchain, transactions can be conducted and completed peer-to-peer. In the meantime, all nodes within the network need to validate and confirm the transactions. There will be no intermediary profit which also lowers the transaction cost.
All historical data, stored in the blockchain, is traceable and tamper-proofed. Each block stored a certain amount of data as a cryptographic hash and each block links to the previous block. To modify the content in any block in the blockchain will change the hash of all subsequent blocks. That is why blockchain is made secure and tamper-proofed.
4. Consensus Maintenance
Nodes in the blockchain are required to maintain consensus around the data verified and recorded in the blockchain. The aim of the consensus mechanism is to secure and maintain the network operation. Read the most common consensus: Proof-of-Work.
5. Trusted DataBase
Under the consensus mechanism, data added in the blockchain will be recorded and updated by all nodes and protected by cryptography. With more and more nodes joining in and computing power increases, it's more difficult to tamper with content in the database.
In the blockchain, the public key address is considered as the identity of a person. But unlike band account, credit card, or debit card, who really owns the public key address is unknown. And everyone can possess various transaction addresses. The transaction is made between two different addresses generated by public keys. To check how much cryptocurrency stored in the public key/wallet address, the corresponding private key is needed.
Apart from cryptocurrency and financial areas, blockchain technology will be applied to more and more aspects in the future. Let's wait and see what will blockchain bring to our life.