Blockchain has become a buzzword these days with the rising popularity of cryptocurrencies. So how does blockchain work?
The cryptocurrencies run on blockchain technology, a type of database or a digital ledger that records all transactions related to the crypto coins. The technology derives its name from the fact that the information is stored in a chain of blocks.
Blockchain technology records information so that it becomes difficult or impossible to hack, alter or cheat the data stored in the systems connected to the network.
The digital records of all the transactions are distributed across the entire network of computers on the same blockchain.
How Does It Work?
The record of all the digital transactions carried out on the system is duplicated and shared across all computer systems operating on the same blockchain.
All the transaction records on the blockchain systems can be accessed from anywhere. An irreversible timestamp is created for every transaction stored in a block.
Blockchain is a decentralised database which multiple users generally manage. This is known as Distributed Ledger Technology.
How secure is blockchain technology?
Blockchain technology provides higher data security and transparency. All the users on the blockchain network can access the information related to all transactions.
Blockchain technology is decentralised, which means a single individual can't have ownership over the data or block other users from accessing the same.
On a decentralised blockchain, multiple users enjoy free access to all the data available on the network. It's almost impossible to hack or corrupt the information stored on the blockchain as the hackers will have to corrupt all the blocks across the network simultaneously.
How blockchain powers cryptocurrencies
Blockchain technology is used to store data related to transactions for every cryptocurrency.
Every time a transaction of a cryptocurrency is done by an investor, the blockchain technology stores the transaction history with the timestamp.
The blockchain platform also stores legal contracts, transcripts and product inventories of every cryptocurrency operating on the same network.