Blockchain is a distributed database
While any conventional database can store this sort of information, blockchain is unique in that it’s totally decentralized. Rather than being maintained in one location, by a centralized administrator—think of an Excel spreadsheet or a bank database—many identical copies of a blockchain database are held on multiple computers spread out across a network. These individual computers are referred to as nodes.
A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
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Simply put, a blockchain is a shared database or ledger. Pieces of data are stored in data structures known as blocks, and each node of the network has an exact replica of the entire database. Security is ensured since if somebody tries to edit or delete an entry in one copy of the ledger, the majority will not reflect this change and it will be rejected.
Blockchain applications are secure.
Blockchain is considered to be extremely secure. This is because the data in a block cannot be modified; only subsequent blocks can be modified. To do this, there must be a consensus between the network majority. Any malicious activity would be detected immediately.
Hang on a minute. These are the same risks we’ve been dealing with in computing for 50 years. At the meta level they are, but when you get down to the details, like any technology, blockchains and smart contracts have found new and creative ways to create security risks.
Asking for credit card information is easy enough but how will you make sure that no one can access a user’s confidential information, or worse, hack your entire system? Blockchain is a real-world solution for your payment processing snd//or money transfer needs.
Blockchain technology can be used for more than just digital currencies
Blockchain isn’t only used for financial transactions. Due to its secure and transparent nature, the technology is versatile to needs beyond one area of expertise. Industries covering energy, logistics, education and more are utilizing the benefits of blockchain every day.
Cryptocurrencies are just the beginning. Blockchain’s most famous application is in Bitcoin but it is also used in around 2,000 other cryptocurrencies. Its ability to create a single, unchangeable record of all transactions means it can be trusted as accurate and comprehensive. Storing each transaction in an unchangeable block solves one of the biggest challenges of digital money – double spending.
Since digital data is easy to copy, without proper controls in place, users could just give themselves more money by copying it. However, blockchain ensures that once a specific amount of cryptocurrency is spent, it can’t be spent again.
Similar models could revolutionise applications like e-voting, customer loyalty programs, and banking – which is why researchers are working so hard to apply the technology to real-world business, scientific, financial, political and other challenges.
At this point, blockchain is a technology with an exceptionally broad set of potential uses. Although blockchain is most famous for its connections to the blossoming cryptocurrency world, several other applications have already been explored. Perhaps even more exciting, though, is that new ways of utilizing blockchain emerge every day.
As such, whether you are directly involved in the digital currency space or not, it’s essential to develop an understanding of blockchain and how it may be used to transform the business and investment worlds.