INTRODUCTION TO BLOCK CHAIN
Block chain is an emerging technology. To explain it in simple terms, it is a ledger. It is a technology to create and maintain a cryptographically secure, shared, and distributed ledger (a database) for transactions. It allows people and businesses to make instantaneous transactions on a network without any intermediary. It provides more secure and safe transactions online.
A blockchain is basically a chain of blocks, with each block containing digital information. They can be envisioned as boxes of data tied up and dependent on each other, like wagons in a train as shown in Figure 1.
Figure 1: Chain of blocks
Blockchain is the digital and decentralized ledger that documents all transactions. Whenever a person buys digital coins on a decentralized exchange, sells coins, transfers coins, or buys a good or service with virtual coins, a ledger records that transaction in an encrypted manner to guard it from cybercriminals. The transactions are also recorded and processed without a third-party provider (a bank). The objective of blockchain is to let digital information to be recorded and distributed, but not edited. The most important advantage of blockchain’s distributed ledger is reduced operational costs.
In a traditional environment, trusted third partiesact as intermediaries for financial transactions. If you must send money to a foreign country, it will pass through an intermediary (usually a bank). It will usually not be immediate and might take up to 3 or 4 days. The intermediary will take a commission to do this either as an exchange rate adjustment or other charges.By eliminating the intermediary, blockchain permits companies to trace products and transactions all the way promptly and easily back to their roots.
The original block chain uses open-source technology that provides an alternative to the conventional bitcoin cryptocurrency intermediary. Bitcoin is a digital currency used to buy and sell items from companies that accept it as payment. The intermediary is replaced by a collective ecosystem verification with great deal of security and speed.
Multiple versions of the person making transactions are available as “nodes” on network functioning simultaneously as transactions executors and miners. Transactions are collected in blocks before getting connected to the block chain. Miners are compensated with bitcoin based on the amount of time they take to check the validity of the transaction and to find the correct mathematical key to link to the block of transactions into the correct place in the open ledger. Miners would get based on the number of transactions carried out by them. The “reward” miners get will lessen every 4 years until Bitcoin production stops. Transactions carried out on a block chain are secure. Cryptographical encryption algorithms ensure that no record of a transaction on blockchain can be altered.