Do you know how cryptocurrency transactions are carried out securely? Which technology is used to perform the transactions safely and smoothly?
Cryptocurrency requires a strong & secure method to carry out the transactions without any privacy issues and data mining. It contains a lot of sensitive financial data that can lead to some serious losses if not secured properly.
In this blog, we are going to discuss Blockchain technology and how it is revolutionizing the digital world by protecting customers’ data.
What is Blockchain Technology?
A large number of you may be new to this term. We can characterize blockchain innovation as a dataset that is divided between hubs of a PC and stores the data electronically in a computerized design.
One of the advantages of the blockchain is that it promises the security of the data without any need for a third party. The reason it is called blockchain is that the data is stored in the form of blocks and is then linked to the set of the previous blocks, forming a chain of information, called a blockchain.
Key differences between Blockchain & Traditional Databases
- Blockchain technology is more advanced as the data is stored in a form of blocks that synchronize with other blocks to form a chain of data. Whereas, traditional data is like a set of individual information that does not link together.
- In a blockchain, the data can not be controlled by a single user or a group, unlike the traditional data.
- Blockchain data is used as a ledger of transactions. While the traditional data generates reports that contain data from specific fields.
- Data entered in the blockchain is irreversible which means it can not be changed back to its original form. However, the traditional data is centralized and mutable.
How does Blockchain Technology work?
Blockchain Technology is an advanced high-tech used by companies like IBM, Microsoft, Intel, Walmart, etc for trading purposes. From performing a transaction to its completion and storage. The steps include:
- Making a new transaction.
- The data is transmitted to a set of computers.
- The computers enquire and audit the validity of the transaction.
- After checking the genuineness, the transaction is verified as a complete transaction.
- The data is stored in a block which then synchronizes with the other blocks of information and makes a blockchain.
The data is stored permanently and the transaction is stamped as a legitimate transaction.
Pros & Cons of the Blockchain:
Pros
- Decentralized for safe transactions
- No third-party needed
- Private & secure data
- Is transparent & reliable
- Maintains the confidentiality
Cons
- Low transactions per second
- Use of illegal activities like the dark web
- Data storage can be a problem
- High technological cost
- Takes longer than traditional methods
The Types of Blockchain Technology
- Public Network: It means the network is open to the public and anyone can join the network to perform the transactions. For example- Bitcoin.
- Private Network: Here, there is one governing body that can choose whether one can join the network or not. It boosts people’s trust as there is someone to monitor the transactions. Everything here is also decentralized like other blockchain networks.
- Permissioned Network: It is like a private/public block network where one needs to seek permission to join the network. The owner has the authority who can join and perform the transactions.
- Consortium Networks: It is like an organization having multiple stakeholders/partners that are willing to join the network. Everyone has to join by taking permission to conduct the affairs.
Summary
Blockchain technology has emerged as a keeper for the people dealing in Bitcoins and Cryptocurrencies. It has made the transactions safer, reliable, and easy to perform. Today, we have stepped into the third decade of Bitcoin, and many organizations use this technology for trading purposes. Some of the key takeaways from this blog are:
- A blockchain is a set of data that is stored in the form of a block and is then assembled with the other blocks of information.
- It is a safe and decentralized form of data storage.
- Bitcoins and Cryptocurrency transactions are performed using this advanced technology.
- It does not require a third-party vendor to perform the transactions.
- Blockchain Technology maintains transparency but comes with high costing.
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