Cryptocurrency and blockchain have become buzzwords these days. While cryptocurrency has been a tad easier to understand as a concept, the blockchain technology that cryptocurrency runs on has been a complex one to grasp. In the simplest of terms, blockchain can be defined as a database that stores data in blocks. The information is recorded in these blocks in a way that makes it difficult to hack or cheat or change the system. Since the blocks of information create a chain, hence the name blockchain.
How Does It Work?
A blockchain is essentially a digital ledger that keeps a record of all transactions carried out on the system. These transactions are then duplicated to be reflected across all computer systems active on the blockchain. Every time a new transaction is carried out the blockchain stores the data on that participant's block and is reflected across all digital ledgers on that network. All transaction data present on the systems of the blockchain can be accessed from any part of the world.
Each time data is stored in a block it creates an irreversible timestamp when it becomes a part of the chain. Blockchain is a decentralised database and is managed by multiple participants, it is known as Distributed Ledger Technology (DLT).
When it comes to cryptocurrency, blockchain technology is used inherently to store information relating to transactions made by and between investors. The cryptocurrency blockchain stores information like transaction history, legal contracts, transcripts, and product inventories.
Advantages Of Blockchain
Blockchain technology is extremely secure and provides transparency. All users who are a part of the blockchain network can access information stored. The technology is decentralised which means that there is no single governing authority with access to all the data and information. Instead, there are multiple participants who have free access to all the data available on the blockchain. It is difficult to hack and corrupt blockchain as the blocks are linked. To corrupt one block, the hacker would have to corrupt all the blocks across the network.