Originally devised in 2008 for the digital currency, Bitcoin, the revolutionary blockchain technology allows digital information to be distributed but not copied. A network of computing “nodes” makes up the blockchain. Each node gets a copy of the blockchain, which is downloaded automatically. It is an incorruptible digital ledger of economic transactions that can be programmed to record online financial transactions. Distributed ledgers can be public or private and vary in structure and size.
Public blockchains need computer processing power to confirm transactions. Information held on a blockchain exists as a shared and continually reconciled database. This database isn’t stored in any single location, which means the records it keeps are made public and easily verifiable. Instead of a single centralized authority, the record’s authenticity can be verified by the entire community using the blockchain.
Blockchain technology provides a new layer of functionality for the internet. It gives internet users the ability to create value and authenticates digital information. There is no centralized version of this information, making it impossible for hackers to corrupt and hence secure. Blockchains are built from 3 technologies:
- Private Key Cryptography.
- P2P Network.
- Program (the blockchain’s protocol).
Authentication and authorization supplied in this way allows for interactions in the digital world without relying on the trust factor. The mechanism of blockchain technology brings everyone to the highest degree of accountability. It prevents missed transactions, human errors, and even exchange done without the consent of the parties involved.
Blockchain security methods use encryption technology that avoids centralized points of vulnerability that can be exploited by computer hackers. It validates a transaction by recording it not only on a main register, but also on a connected distributed system of registers. These registers are connected through a secure validation mechanism. This self-auditing ecosystem with a digital value reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Once completed, a block goes into the blockchain as a permanent database. Trying to alter or corrupt any information on the blockchain requires a huge amount of computing power, which is practically impossible.
With all its potential benefits and applications, for some, the ever-growing size of the blockchain is considered to be a problem, creating issues of storage and synchronization.