Blockchain is a technology that most of us did not even heard of before bitcoin and other cryptocurrencies became a hot topic of this decade. Now that everyone is looking for profitable ways to trade crypto and become rich the first step should be learning about the technology that these cryptocurrencies use to operate. That is why we are sure you will like today’s article on the basics of blockchain. So, keep on reading to know more.
What is Blockchain?
Blockchain can be described as pieces of information that is distributed among several computers that are connected to a single network. The fundamental work of a blockchain is to store valuable information digitally. If you destroy one computer connected to the network you cannot get rid of the information.
The best use of blockchains can be witnessed from cryptocurrencies like Bitcoin. Cryptocurrencies like Bitcoins use the blockchain technology to note and save all the important transaction information digitally.
Traditional Database vs Blockchain
A traditional database and a blockchain has one massive difference that makes people favour blockchains more, and that is the data structure. Blockchains manage data like no other database can do. The blockchain technology uses blocks that are digital information storage, where all transaction data are stored.
These blocks have their own storage capacity and once it gets filled, it closes and inks with the previous block and form a chain. The information in these blocks cannot be hampered with. All the recorded information has date and time stamps on it and cannot be overwritten with any technology. Thus, making them fraud proof.
Whereas, a traditional database uses the same old table and charts to store data which are very vulnerable to hackers. That is why we see such surge in Bitcoin trading these days. People trust this technology and trade in bitcoins.
Mastermind Behind Blockchain Technology
Uptill now we saw how awesome the blockchain technology is and how safe it makes every transaction you make. But who invented it? Who was the mastermind behind this revolutionary technology which literally gave birth to amazing cryptocurrencies like bitcoins, Ethereum, and more?
The creator of Blockchain technology is still a mystery, we do not know if it was a single person or a group who created it but we do know a name, it is Satoshi Nakamoto. He published a whitepaper online in 2008 which explained this amazing technology behind the digital money.
Four Ways To Build a Blockchain Network
1. Permissioned blockchain network
If you run a business and wish to set up a private blockchain the best one to set up is a Permissioned blockchain network. Although it is also true that there are several public blockchain networks that run on this same technique.
The reason behind its popularity is the restrictions it places on participation. The Permissioned blockchain networks can help you control participants in an transaction on a network. Only the invited participants can join the network.
2. Private blockchain network
A private blockchain network provides peer-to-peer network connection. Even though the private blockchain networks are decentralized, there is always one party involves which governs over the participants of the network.
Moreover, they can also execute a consensus protocol. The governing party of a private blockchain network can maintain the shared ledger. This network can even work like LAN and operate within a limited space like an office or a building thus it significantly promotes security.
3. Public Blockchain network
A public blockchain is as the name suggest, it is for the public and anyone can join it. Unlike private and Permissioned blockchains where you would need permission or invitation to join, the public network can be joined by even a child. The best example is bitcoin. Sounds fun but it has its drawbacks like little to no privacy, heavy power usage and weak security.
4. Consortium Blockchain
A Consortium blockchain eliminates the weakness of both Public blockchain network and Permissioned/Private blockchain network. With Consortium blockchain several parties can be the head of a blockchain where they all would enjoy the power of submitting new participants and access the data.