Blockchain is a digital ledger that stores transaction details. These records are stored and aggregated in containers called blocks. These blocks are linked to each other and are secured using cryptography.
HOW DOES BLOCKCHAIN TECHNOLOGY WORK ?
There are four Components a blockchain needs to have a life of its own.
* PEER-TO-PEER NETWORK : The first thing, required to support a blockchain is a peer-to-peer network. A network of computers also known as nodes. They are equally privileged.We need this network so that we will be able to communicate and share with each other remotely.
* CRYPTOGRAPHY : The second ingredient is cryptography. It is the art of secure communication. We need cryptography because of the first component. Anybody can participate in this network including bad actors.
* CONSENSUS ALGORITHM : The third component is a consensus algorithm. There are many types of consensus rules in Bitcoin’s case we use a consensus algorithm known as Proof of Work.
* PUNISHMENT & REWARD : The last component is Punishment and Reward. This Component is actually derived from game theory and it make sure that it will be in people’s best interest to always follow the rules. It works on psychological behaviour.
Typical Features :
- Blockchain is something which is available for anyone to access.
- Data can only be added,we cannot alter any information which is added to the blockchain and that is called immutable feature.
- To add any data, a typical mathematical puzzle has to be solved by the validators of the network.
- The solution has to be approved by everyone in the network. The participants of the networks are responsible for approving all the transactions.
- No central authority has control over the information and that’s why a blockchain network is a democratic network.
- Privacy of all the users is maintained by the cryptography and the transactions which also happen on the blockchain network are interrupted.
Blockchain has been used in other production as well. Some of them are:
* Human Resources
TRAVEL – To make the verification of Document more easier.
MUSIC – To stop music piracy and to compensate artists for purchased songs.
CYBERSECURITY – Data integrity can be guaranteed. There is no possible way for even a single point of failure.
HUMAN RESOURCES – Verification of identity of employee, history, etc.. Payment and benefit process validation.