For the past eight months, cryptocurrency has dominated the news. The market cap peaked in January at around 800 billion USD. Although the crypto craze has subsided in recent months, the technology that underpins the phenomenon, Blockchain, is still rapidly expanding. The Blockchain industry (which is currently worth around $1 billion) is expected to be worth $60.7 billion by 2024.
If you are completely new to the concept of Blockchain, you do not need to worry. Today, I will introduce you to the basics of this technology and give you a few tips that should help get you started. Let’s get started.
What is Blockchain?
In simple terms, a blockchain can be described as an immutable decentralized database. Each block contains a timestamp and a link to the previous block, allowing data to be recorded chronologically. It is the combination of these properties that make blockchain perfect for secure transactions.
This technology can be used to create immutable, secure ledgers of transactions. It is decentralized in nature, which means that nobody knows who can view the data stored on a blockchain network.
Things You Should Know About Blockchain as a Beginner
Now that you’ve got a basic understanding of how Blockchain works, here are a few things you should know before you dive in:
1) Privacy and Security
Blockchain security is dependent on both the block structure and the peer-to-peer network that supports it.
New blocks are added to the blockchain in a linear and chronological order. Because each block is linked to the one before it, anyone attempting to tamper with data would have to decrypt previous blocks before reaching their target data and persuading all other nodes to do the same. Because tampering with data is both technically and economically impossible, the security of a blockchain is two-fold.
Many other blockchain network users have copies of the blockchain as well. This adds a third component of subversive human cooperation and planning to the network’s overall subversion. Malicious ledger tampering is thus impossible.
Data is securely recorded in a public space using blockchain technology. This enables blockchain data to be decentralized while still being reconciled.
A digital signature is an important privacy feature of blockchain. No one can identify users in transactions unless they actively identify themselves and link their identities to their keys. Because blockchain networks are permissionless, users can generate keys without ever associating them with identities, allowing them to conduct transactions in private.
These digital keys are generated by the network’s hashing process to authorize transactions. Malevolent parties are prevented from creating fraudulent transactions by the network’s technical and economic security. Because each block is labeled with a unique code, the possibility of hackers compromising a user or public ledger data is almost non-existent.
2. Its Uses
Aside from digital currency, blockchain technology has a wide range of applications.
Because of the security of blockchain, it may be used for regulatory compliance and auditing. Using a global, public ledger reduces the possibility of human error and strengthens record integrity because data entered into the blockchain is much more difficult to alter than data kept in a centralized, private database.
Smart contracts, for example, in the insurance industry, can automatically implement conditions agreed upon by two parties. This reduces the possibility of technological and human errors in financial transaction management that necessitate specialized triggers.
Smart contracts increase efficiency and eliminate the possibility of funds not being distributed by the terms of the contract.
3. Blockchain is not Bitcoin
It’s important to understand that blockchain and Bitcoin are not the same things.
Blockchain technology is used to secure and record transactions in digital currencies such as Bitcoin and other cryptocurrencies. Each transaction’s data is hashed into a block by an encryption method.
Following that, each new block contains a list of the previous block’s confirmed data, which is chained together and ordered chronologically. Each functioning member keeps a copy of the blockchain data to keep it up to date for the network’s users. They maintain a balance of incentives to preserve security and throughput for both business and personal use. This economic equilibrium allows digital currencies to remain decentralized and free of centralized control, while still allowing for quick and low-cost transactions for business and personal use.
Because of their decentralized nature, blockchain networks are also resilient. The ledger can still function in the event of an attack or a technical failure. Parties can enter and leave at any time, picking up where the network left off. The sole goal of blockchain technology is to capture and disseminate data in an uneditable format.
Bitcoin is a blockchain-based digital currency. It is only available electronically and is not regulated or distributed by banks or other institutions. Bitcoin’s blockchain technology, in addition to protecting user security and reducing the risk of fraud and theft, allows for peer-to-peer transactions.
Blockchain is an exciting technology that has the potential to transform how we live, work, and play. It’s important to understand exactly what it is first before diving into blockchain development and deployment.
Start by getting a basic understanding of how blockchains work, and then move on to the next steps in your career path. I hope you the best in your future endeavors!