Block Chain Technology: How it works and why it matters

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Blockchain Technology is becoming increasingly popular among startups and entrepreneurs, as well as in the tech

community at large. But what exactly does it do? And why

does it matter? In this article, we’ll explain how block

chain technology works, why it’s so useful, and what impact

it might have on your future businesses and investments.

Understanding Blockchain Technology

Blockchain technology uses cryptography to make sure that each

block is unique, secure, and unchangeable. Blockchains are

tamper-proof because they use consensus mechanisms to validate

data coming in or going out of them. One of its most unique

properties is how public they are. Anyone can view a blockchain’s

contents at any time. And if you need details about a transaction

or past activity on a blockchain, it’s extremely easy to find that

information with an internet connection and computer program.

Nodes And Mining

Each block on a blockchain contains a hash pointer as a link

to a previous block, forming an unbroken chain. Each block

is also associated with a set of valid transactions and user

accounts. These are not stored in individual blocks but rather

distributed across every node in all full copies of a blockchain’s

database. Because each block contains only hashes of valid

transaction information, adding new blocks to an existing

blockchain creates an unbroken chain from that point forward,

without ever modifying older transaction data or rolling back

changes. This provides users with maximum transparency into

how much value they have stored at any given moment, while

simultaneously preventing external attacks by hackers or outside

sources on older transactions within the system.

Private Keys And Public Addresses

To understand how a blockchain works, you must first understand

two basic concepts: private keys and public addresses. A public

address is simply an alphanumeric string that anyone can use to

send currency to your wallet. Think of your public address as being

like a bank account number or routing code. A private key, on the

other hand, is secret information used to access funds in a particular

digital wallet. Private keys take many forms—they can be simple

passwords (of numbers or letters), complicated cryptographic formulas,

human-recognizable words or phrases, etc.—but they all function

similarly by proving ownership of funds in a certain wallet.

Virtual Coins And Tokens

Virtual coins like Bitcoin, Ethereum, Litecoin, etc. are not

physical coins but they are known as virtual coins because

they exist digitally in computers. These virtual coins are also

called cryptocurrencies because they act as a medium of exchange

. They serve three main purposes that include – Store of Value,

Medium of Exchange and Unit of Account. In other words

cryptocurrency is a digital asset designed to work as a medium

of exchange that uses cryptography to secure its transactions,

to control the creation of additional units, and to verify the transfer

of assets within an economy. One important thing about

Cryptocurrency is that nobody owns or controls it hence

decentralization feature comes into the picture which gives power

back into people’s hands who use Cryptocurrencies instead

if government or banks.

Decentralized Applications Or DApps

Decentralized applications are software programs that store

their data on a blockchain instead of a central server. DApps

can’t be controlled by any single entity, which makes them

resilient to censorship or tampering. DApps have no single

point of failure and do not require users to reveal any personal

information in order to use them. Some examples of decentralized

applications include CryptoKitties, EtherDelta, BitTorrent

(before it was shut down by its creators), Steemit, Storj,

MaidSafeCoin, and SiaCoin.

The Future Of Blockchain Technology

Blockchain technology is already being tested in more than 50

global banks and many large enterprises, including IBM, Intel,

Samsung, Visa. The technology also has practical applications

outside of finance. Energy companies are implementing

blockchain solutions to record electricity generation from

solar panels or wind turbines. And in fact, some countries

are using it to record birth certificates or land titles. This

decentralized system can be used by almost any industry

that relies on third-party verifications. The real question isn’t

whether blockchain technology will disrupt your business

model—it’s what will you do when you get disrupted?

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