Blockchain is a type of technology that underpins bitcoins. Bitcoin is a type of cryptocurrency that runs on blockchain technology and also referred as digital coin. Bitcoin is also referred as peer-to-peer electronic cash system. Blockchain technology is a distributed network which created a new backbone for the internet.
The blockchain technology is like a digital ledger which has all the transactions that has ever taken place. Those who use the current blockchain technology says that transactions using bitcoin is safer than current cash transaction system. The blockchain is said to be decentralized meaning that it is not controlled by one central database or authority. So, all the transactions that has taken place in distributed in several networks.
Working of Bitcoin Blockchain:
The bitcoin has no central authority whereas the current currency has a centralized authority. The bitcoin blockchain is maintained by a network of people known as miners. These miners are people running purpose-built computers that are actually competing to solve complex mathematical problems in order to make a transaction go through.
For example, say lots of people are making bitcoin transactions. Each transaction originates from a wallet which has a “private key.” This is a digital signature and provides mathematical proof that the transaction has come from the owner of the wallet. Now imagine lots of transactions are taking place across the world. These individual transactions are grouped together into a block, organized by strict cryptographic rules.
The block is sent out to the bitcoin network, which are made up of people running high-powered computers. These computers compete to validate the transactions by trying to solve complex mathematical puzzles. This validated block is then added onto previous blocks creating a chain of blocks called a blockchain. One of the advantages of blockchain is that it can’t be tampered with as each block that is added onto the chain carries a hard, cryptographic reference to the previous block.
The blockchain is the first technology that enables the transfer of digital ownership of business in a decentralized and trustless manner. There’s no doubt that the blockchain technology will evolve quickly as will the applications that rely on it in the future.
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