In recent years, the crypto market has exploded. People are now more aware of cryptocurrency than they were before. It is because it is finally gaining some mainstream popularity. Also, many companies have started to accept crypto as a form of payment. Some ISPs are also thinking about doing the same. Click here to become a subscriber, Learn more to know if they allow users to pay in crypto.
If you know about cryptocurrency, the chances are that you have heard of the term blockchain. This is because cryptocurrency is supported by this technology. But the use of blockchain is not limited to supporting crypto. It extends far beyond that.
Defining Blockchain Technology
Anyone who knows of crypto must be familiar with blockchain technology. But what is it? Well, it is a structure that can keep all the transactional records. These records are also known as blocks. The blocks are stored in multiple databases, also called the chain.
The chains are supported by the network that is supported via peer-to-peer or P2P nodes. This storage of data is called the digital ledger. Whenever a transaction takes place within the ledger, it is authorized by the owner’s digital signature.
This authenticates the transaction and protects it from being tampered with, making the information in the digital ledger secure. In other words, you can think of a digital ledger as a Google spreadsheet that is shared among multiple users within a network. The spreadsheet will contain all the transactional data. And everyone will be able to see the information.
How Is Blockchain Technology Different?
People usually use their bank accounts to transfer funds to others. But guess what? There is one issue that many neglects or are unaware of. You see, your transactional information can easily be tampered with.
Hence, people resort to third-party payment applications, which is why they have boomed so much in recent years. However, you no longer need to use those apps. This is because blockchain technology keeps transactional data protected. So, people can rely on this tech fully, making blockchain a perfect solution for your transactional needs.
How Does It Work?
As blockchain offers a more secure way of making and storing transactions, there is no surprise that many companies have started to adopt this technology. But how does it work? This is exactly what you will find the answer to in this section.
Blockchain is compromised of three technologies: cryptographic keys, a P2P network, and a means of computing to store data. There are two keys that make up the cryptographic keys, Public Key and Private Key. These keys make the transaction successful between the two parties. Every individual has access to these two keys. It helps them produce a digital identity reference.
This identity can also be known as the digital signature which is used to control or authorize transactions. The digital signature is merged with the P2P network. This means that people within the network will be able to act as authorities and can use that digital signature to agree upon the transactions.
When the deal is authorized, it gets certified by a mathematical verification, allowing the transaction to happen smoothly between the parties. In simpler words, people who use blockchain employ cryptographic keys which help them perform various digital transactions over the P2P (peer-to-peer) network.
Blockchain: The 4 Types
Blockchain technology has four different types. And here they are:
1. Private Blockchain Network
Private blockchain is perfect for organizations and businesses as they function on closed networks. Companies can opt for this tech to customize different options like accessibility, parameters, and authorization of the network.
2. Public Blockchain Network
Cryptocurrencies like Bitcoin and Ethereum emerged from the public blockchain network. Their emergence also made the DLT or Distributed Ledger Technology famous. This technology deals with many issues and challenges, making everything much secure
. With the help of DLT, the data is spread across the P2P network. There are two popular consensus algorithm, Proof of Stake (PoS) and Proof of Work (PoW) that is used to verify the authenticity of the information.
3. Permissioned Blockchain Network
This is the hybrid of private and public blockchain networks. Companies usually prefer to go with this technology to get the benefits of both. It is a private blockchain that people can use to give access to specific individuals.
4. Consortium Blockchain
This is similar to Permissioned Blockchain. However, the only difference is that multiple organizations will get to manage the consortium blockchain. They are highly complicated to set up. But once it’s installed, it can provide better security. Also, this technology will allow different companies to collaborate easily.
One of the reasons why blockchain is steadily gaining more traction is that it offers many benefits. Let’s have a look at some of them.
As stated earlier, blockchain technology provides great security. This means that your transactional data will be protected and will not be tampered with. And it’s possible because of the digital signature feature. Without having the right digital signature, no one will be able to corrupt the data.
If you want to make a transaction, you will be required to get the approval of a regulatory authority like a bank. However, blockchain is decentralized, which means that you will be able to make the transaction at your own will but with the mutual consensus of the other user. In addition, the transactions will be much faster, safer, and smoother.
Another thing you should know about the blockchain is that it will give you the ability to automate your transaction. This is possible because this tech is programable. And hence, it can perform specific actions automatically whenever the criteria you have defined are met.
Blockchain technology is still in its early stages. People are not fully aware of its potential just yet. And though it may have gained popularity because of cryptocurrencies, it is important to note that this tech can be used for many other purposes.
For instance, companies can take advantage of consortium blockchain to better collaborate with other businesses. The future of blockchain technology looks bright. And it will certainly be interesting to see how it changes the world.