Brief Overview on Blockchain Technology
Posted By : Akshay Singh | 26-Sep-2019
Blockchain was first perceived by Satoshi Nakamoto as a peer-to-peer money exchange system in 2008. Nakamoto referred the exchange tokens for transaction among clients in his system as Bitcoins. As suggested by the name, blockchain is a chain of blocks that contain information such that the data inside the block cannot be tampered with. A ‘block’ is defined as a file of recorded information that cannot be tampered with.
Some of the characteristic features of blockchain technology are as follows -
- Immutable – (permanent and tamper-proof) a blockchain contains permanent record of transactions. Once a block is added to the blockchain, it can’t be altered. This creates trust in the transaction record.
- Decentralized – (networked copies) a blockchain is stored in a file that can be accessed and copied by any node on the network. This creates decentralization.
- Consensus Driven – (trust verification) every block on the blockchain is verified using various “Consensus Models” which contain rules for confirming a block, and rarely use a scarce resource (such as computing power) to prove that adequate effort was created. In Bitcoin, this process is called as “Mining Process”. A central authority or an explicit trust-granting agent is not required in this mechanism.
- Transparent – since the blockchain is open file, any party can freely access it and audit transactions. This creates proof for tracking some lifetime assets.
Blockchains can be classified as a public or private depending on its application -
Public – Public blockchains have
- no single owner
- visible by anyone
- their consensus process is open to all to participate in
- fully decentralized
Bitcoin is an example of a public blockchain.
Private/ Permissioned – Private blockchains use privileges to control who can read from and write to the blockchain. Consensus algorithms and mining usually aren’t required here because a single entity has ownership and controls block creation.
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