Blockchain is a frequently used term, as far as the world of Bitcoin is concerned. But most of the people know it as the record-keeping technology that drives the Bitcoin universe. But there’s a lot more you need to explore about blockchain.
In a nutshell, a blockchain is a piece of digital information referred to as a ‘block’ contained in a public database known as the chain.
Information contained in blocks
Blocks are meant to store information related to a transaction. Like the date, time, the amount involved in the transaction. It contains the information of the parties involved in the transaction, with the only difference that digital signatures are used instead of the actual names of the participants.
Each block is assigned a specific code which distinguishes it from other blocks, this unique code is called Hash.
A single block has the capacity to hold 1MB of data, it may look small but it is enough to store near about 1000 Bitcoin transactions. The Healthcare industry is a prime example where the technology is in excessive use.
Working of a blockchain:
Now when we have learned about a block, we must relate that blockchain technology is nothing but a series of blocks joined together to form a chain-like structure. For a block to be added to a blockchain the following boxes must be ticked-
- The transaction must occur because that is the starting point.
- The transaction must be verified. This involves checking the genuineness of the transaction. The transaction must be stored in a block. After a transaction is authenticated, all the details regarding, date, time, and amount are stored in a block. Once you open demo account of yours, you can proceed with initiating your first transaction.
- Once the block is created and the details regarding a transaction are stored in it, it must be assigned a unique code, a Hash.
Bitcoin and blockchain
Blockchain is a well-established concept, but it got its first real-world application when Bitcoin was launched. The creator of Bitcoin in a research paper stated that the concert of Bitcoin is based on blockchain.
When a transaction in Bitcoin is made, the program on the user’s computer must solve a complex mathematical problem that is known as a ‘hash’. The process of solving this problem is termed as hashing. A transaction in Bitcoin can be using a private key or a public key. Both of them have so complex mathematical equations that are almost impossible to solve.
This is the reason why transactions in Bitcoin in the blockchain technology are almost unassailable.
Need for blockchain in cryptocurrencies:
Blockchain has eliminated the need for a central controlling authority as needed in the case of fiat currency transactions. Also, the fact that there are no transaction fees applicable in Bitcoin transactions, makes it attractive. It is possible only because of the existence of blockchain behind the scenes.