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Richard Warepam
Richard Warepam

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The Simplest Way to Understand Blockchain Technology

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What is Blockchain?

Blockchain is defined as a decentralized, immutable, and secure digital ledger that is distributed across a network of computer systems.
Now, let's take a closer look at this definition:


What is mean by decentralized?

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Assume you wish to transfer some money to one of your buddies. What will you do? You will request that your bank pay any amount of money to his bank account. An intermediary is involved in this process to execute the transaction. That, my friend, is what we term a "Centralized" system because you won't be able to conduct the transaction if the middleman (bank authority) is unavailable for some reason.

So, when we say it's a decentralized system, we imply there's no middleman involved. In other terms, blockchain employs the peer-to-peer (P2P) network system.[Note: Peer-to-Peer is a service in which two people engage directly with each other without the use of a third-party intermediary.]


What is mean by distributed digital ledger?

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Do you see the book that the shops used to keep track of their sold things and the money they sold?– That is referred to as a ledger. It is where we keep track of our transaction data for security purposes.

What exactly is a digital ledger? It is a ledger that stores all of a network's transaction details digitally."Is blockchain technology then solely limited to the banking sector?" you may wonder. The response is a resounding NO!! Because all you need to know about a "digital ledger" is that it can hold a massive quantity of data that is distributed among the users in a certain network. As a result, it is often referred to as a distributed digital ledger.


What is meant by immutable?

Immutable means - It can't be modified! So, Blockchain is immutable, after data is verified by everyone or the maximum percentage of the network users. That precise info can never be changed again. The reason for this is that the ledger is distributed to everyone in the network, and if the data in your ledger does not match that of others in the network, it will be rejected. You have no choice except to amend your ledger data.


Why is Blockchain considered secure?

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To understand why this technology is deemed secure, you must first understand the blockchain structure. A blockchain is a series of blocks linked together. Data is kept inside these blocks, together with its hash value and the address of the previous block.

What exactly is a hash value? A hash value can be thought of as a record's fingerprint. The block's data is handled using a cryptographic technique and a unique numeric value. The hash value is generated to identify the block's data. If the data is changed in any way, the hash value will change dramatically. As a result, the hash value ensures that the block's data does not change.

What if someone hacks the data by changing the address of a block? If a block's address is modified, all subsequent blocks in that block become invalid, since all blocks are linked with the address of their prior block. So, in order to hack the blocks, the hackers must hack all of them at once, which appears to be an impossible task. As a result, it is also an extremely secure network.


Summary of What is Blockchain Technology?

A blockchain is a chain of blocks with data saved within each block. These data are saved in a certain order, similar to a ledger, and once validated, they cannot be modified or manipulated. This secure ledger is transmitted to every user connected to the peer-to-peer decentralized network.
As a result, it is characterized as a decentralized, immutable, and secure digital ledger distributed throughout a whole network.


Conclusion:

This was the simplest method to explain blockchain technology to you.
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