Even though this is very old, people’s interest in bitcoin and the popularity of cryptocurrency increased in the last year, the interest of this blockchain technology increased further for that. That’s because, bitcoin or most other cryptocurrency works based on block chain technology. So to know what cryptocurrency is and how it works, first we need to know the technology behind it. So today I will discuss about the technology behind cryptocurrency, blockchain key and how it works. I will try to explain this whole blockchain technology a little simpler and in a little bit. Let’s know first,
What is Block Chain?
First look carefully at this term. Then you will get a basic idea that what this name actually means. Blockchain means that the chain is made of blocks. We all know what the chain is. So the blockchain term is meant by creating a chain of blocks by linking a number of blocks with one another. Well, the chains that are made by these blocks basically stores information.
Blockchain technology has been used in many cases for a long time. But, the interest in this technology by ordinary people was mainly made in 2009 after the acquisition of the cryptocurrency company named Bitcoin. Technically speaking, the Blockchain is a distributed laser, which is opened to everyone. When data is interconnected between blockchain blocks, it is almost impossible to delete or edit any data in the blocks. But why?
Alright, to know this, first of all we need to know what are in each of these blocks. Each single block in the complete blockchain has three main things – data, hash and the hash of its previous block in the chain. In other words, each block in the blockchain has its own data; the block has its own hash and the hash of its previous block or the block behind it. Some people may say, “I understand the data, but what is the hash thing?”
Hash is basically an identifier. The hash of each block is the blocks own identifier and it is specific for every block. In other words, the hash of two blocks can never be the same. This issue is very similar to the fingerprints of people. As the fingerprints of two people will never be the same, the hash of two blocks will never be the same. And these hashes are generated according to the data stored in each block. This means if the data of a block is changed, the hash of that block will be changed.
Now, think about why each block has the hash of its previous block. If every block also has the hash attached of its previous block, no block data will be changed whenever the change is required. So it is almost impossible to delete or change every data added in the Blockchain. Because, in this case, if you want to change the data in a block, then you have to change all previous block data with that block, otherwise the entire blockchain will be invalid or it will not work.
How does the blockchain work?
At this point, it should be clear that how Blockchain technology ensures security. But another major reason for a Blockchain being secure is that its network is distributed. The Blockchain basically creates a P2P network, where each block’s data can be verified by any person who is connected to the Internet. When a new one registers to this blockchain network, he gets copies of all previous blocks and he verifies each block and ensures that every data contained in the blockchain is still ok. The more blocks in the blockchain are verified, the more the data becomes more stable and consistent. Basically this way, blockchain technologies continues to move forward. We all know that Bitcoin transactions works based on Blockchain technology. Let’s see how it works.
Bitcoin Transaction System
Suppose you have 5 bitcoins and you want to send 2 bitcoins from there. In that case the amount of money will be transferred from your wallet to my wallet. When you send the bitcoin to my wallet address, Just then, with all the details of this transaction, a new block will be created in Blockchain. The data of this block will be consisted with your wallet address, the receiver, i.e. my wallet address and the amount of bitcoin that you send.
Now this new block will come in front of everyone who is connected to Blockchain to verify. When they all verify this block or make sure that everything is okay, then this transaction record will be permanently kept and the transaction will be completed. The people or person that handles this verification process, they are called Bitcoin Miner. And, as much as you have to pay for processing this transaction, most of them will get Bitcoin Miners, who are using their hardware’s to do Bitcoin Mining or doing the work of verifying the blocks. It is definitely a clear idea of how the Blockchain works and why the miners can earn Bitcoin by mining bitcoin.
Cryptocurrency Fact: Do you know why it takes about 10 minutes for every one bitcoins transaction process? The reason for this is the blockchain. Thinking about security in Bitcoin Transaction, every new block is created every 10 minutes. So if you are requesting a transition, you have to wait 10 minutes to create a new block with that transaction.
Hopefully, I could easily describe what the blockchain is and how it works. Today, I’ll end up here today. I hope you like this article today. If there are any questions or opinions, please tell me in the comments section.