As Bitcoin has become a household name, the concept of a digital currency existing outside of government or institutional control is equal measures thrilling and perplexing. Potentially more exciting than Bitcoin is the technology it sits on top of: Blockchain.
Businesses are seeing the potential to leverage the Blockchain technology to solve problems and improve efficiencies; it could foundationally change transactional operations.
Blockchains are defined as digital, public ledgers (or databases) for managing transactions and information.
Step 1: Transaction requested
Step 2: Node network verifies and validates the request
The Blockchains network of computers and servers (nodes) collectively validate the request for a block; the system stays in sync via consensus-based algorithms.
Step 3: Request accepted, and transaction recorded
Accepted transactions are encrypted using cryptography; they’re stored in a “block”. The block is connected to the previous block by a link (aka, “hash function”), which then builds a secure and chronological chain. At this point, the record is permanent and cannot be edited or reversed.
Step 4: The blockchain is updated across the network
Records are linked together, creating a secure, relational chain, and the entire blockchain is also updated and duplicated across all the nodes on the network.
Peer-to-Peer (P2P) Technology
Two parties can exchange or record information, without an intermediary institution overseeing or controlling the transaction.
Consensus networks, comprised of an unstructured collection of localized computers and servers, replace the function of centralized institutions in creating ledgers.
Blockchains use this military-grade, complex mathematical algorithm encryption over multiple points of the chain; decoding requires a secure pin.
• Financial transactions in traditional banking
• Data storage for IoT devices
• Legal ledgers
• Supply chain management
• Virtual Wallet
• Secure voting
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