New Delhi: The popularity of cryptocurrencies is increasing rapidly. Those who have not invested in it have also heard about it. After the introduction of the digital rupee by RBI and 30 percent tax in the budget, crypto is once again in discussion. Now it is being speculated what will be the digital currency of RBI.
In the midst of these discussions, let us know about the technology which is called the backbone of Cryptocurrency. Its name is Blockchain Technology. Blockchain technology is behind the concept of many other virtual currencies including Bitcoin, Ethereum, and Dogecoin.
This technology was introduced in 2008
This technique was started in 2008 by a man – or several people – named Satoshi Nakamoto. (The real identity of its initiator is not yet known.) Blockchain technology is largely behind the success of bitcoin. There is a decentralized ledger, that is, a detailed decentralized ledger, which registers all the transactions under the online peer-to-peer network, which works independently. It keeps track of every transaction happening on the network.
The function of blockchain is such that this system works without the control of any central authority. With this, users have complete control of their assets and transactions.
What is Blockchain?
To understand blockchain, let us compare it with the database. The database is a collection of information of any system. For example, suppose a hospital’s database will contain information about patients, staff, medicine, patients’ movement, and so on. All this information will remain in the database. Blockchain is also like a database. It collects information under several categories. These groups are called blocks and these blocks are connected to many other blocks, which form a chain of data in a way. That’s why this system is called Blockchain.
However, unlike normal databases, the blockchain is not controlled by a single authority. It was designed with democratic thinking that it would be run by its users.
How does Blockchain work?
Simply put, blockchain is a digital ledger and any transaction that takes place on it is visible on every computer connected to the chain. This means that wherever a transaction occurs in the blockchain, its record will be recorded across the network. This is called Distributed Ledger Technology (DLT).
Understand it with this process of transaction…
- Suppose a cryptocurrency user made a transaction.
- The data of this transaction will go on the interconnected computers on the chain, and they can be accessed from anywhere.
- If you want to check the validity of the transaction, then check it with an algorithm.
- After confirming its validity, the data of this transaction is added to the block of all previous transactions.
- This block is connected to other blocks, so that the information of this transaction is recorded in the ledger.
What are its benefits?
First of all, this technology maintains transparency because everyone on the network has access to every record. And above all, it is a decentralized system, that is, no one organization or person has control over it and no one person can control every data.
Along with being anonymous, it also gives security to the users. For example, if a hacker wants to hack a system, then he will have to corrupt every block on the entire network. Even if a hacker corrupts a block, then only that block can be identified by cross-checking, so these things make the blockchain secure.