What is blockchain technology? And its types

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What is blockchain technology And its types

Blockchain technology is a decentralized database made up of records and plays an essential role in cryptocurrency systems, healthcare systems, and educational establishments. When a transaction is completed, it becomes unchangeable. 

Blockchain know-how:

Blockchain technology is a method of saving data that makes it impossible to change, steal data, or scam the system. A data structure or ledger is shared among computer networks through nodes. A blockchain is a decentralized database made up of logs called blocks that are used to keep records across multiple computers so that any block cannot be changed without affecting all subsequent blocks.

Each block contains various transaction details. In a blockchain, like a database, information is stored digitally in an electronic medium. Blockchain technology play an essential role in cryptocurrency systems, healthcare systems, and educational establishments. The Blockchain’s innovation is that it ensures the reliability and protection of information.  This helps to execute transactions without the need for a third-party intermediary.

Related: What are decentralized applications?

The Secrets of Blockchain:

A blockchain collects information that is stored in blocks. When a block’s storage capacity is reached, a new block will be created, and it will be added to the blockchain. Every block contains transaction history, and whenever a new transaction occurs on the network, the transaction data is added to the block. Distributed Ledger Technology (DLT) is a collection of data that is collected during a transaction made through the blockchain. It is controlled by a team of miners, and validators. 

A hash is created during a transaction that is unchangeable by anyone. This means that if one block in a chain were altered, the whole blockchain system would be messed up. To crook a blockchain system, hackers need to alter each transaction’s data. When instated in a decentralized manner, data structures contribute directly to an irreversible timeline of data.

When a transaction is completed, it becomes a permanent block in the system and a unique timestamp is given to it. As the blocks increased, the security level also increased because hacking is impossible. No one knows in which block the data will be stored. Blockchain technology is used in cryptocurrencies, finances, medical fields, meta projects, etc.,

Related: What is web3.0 crypto?

Why was Blockchain technology in Hype? 

There have been so many attempts in the past to create a blockchain, but they have all failed. To everyone’s surprise, bitcoin was created by an anonymous person. They implemented blockchain technology in it. Most normal databases, such as SQL databases, want someone in control who can change the entries. Blockchain technology is a unique feature and is accessible by people all over the world in the form of mining and validating transactions. Furthermore, crypto data stored in the blockchain is unique, so spending twice, hacking, or changing is not possible. 

It will generate a trustworthy, unfiltered, and cryptographically secure collection of data and information accessible globally. This defining feature will lead to the growth of the third generation of the online platform. Blockchain generates excitement and is regarded as the technology’s future. In a blockchain, data is distributed across various nodes and it is controlled in different locations.

This not only acquires additional data but also ensures the reliability of the data stored. If someone tries to change a data, the other nodes will get a notification of alteration, and the signal will be passed to all nodes. It will avoid scamming happens in the blockchain and prevent the issue. By this, no data can be changed in any blocks in the blockchain.

Read: How to invest in web3? 10 best ways

Step into the Blockchain World:

Here we can discuss a centralized transaction as an example. If you are sending money to your friend through a bank account. The data will be stored in the bank, and the bank’s authorized person knows to whom you are sending, how much you are sending, and from where to where it is transacted.

Here the problem arises. These details will be stored on a centralized server, which the hackers will easily hack and cut your transaction at one point and redirect your money to their account. In some cases, they will collect your password through the centralized servers and loot your money without your knowledge. We have recently seen many cases regarding these types of scams. Is this what we want? 

No, the value of each penny costs more. So to avoid these scams, we need blockchain technology. The crypto transactions are made through the blockchain without any intermediates. The amount will be directly sent to the other person through the nodes of the blockchain. By using the hash, the other person can verify whether they received the money or not. Security and privacy are high in blockchain technology compared to traditional finance.

Here, no data is stored other than a hash, so we can’t find the sender and receiver addresses, timestamp, or amount being transacted. That’s why many governments strongly believe in blockchain and implement it in various fields like law, medical, and banks. 

Related: Distributed Ledger Technology(DLT): Explained

What are the advantages of Blockchain Technology?

1. Extremely safe:

It is completely safe to use because any change of data is impossible. Only the sender and receiver will get the notification, and third parties can’t take part in it. 

2. Decentralized Framework:

It is a decentralized technology, no one can see what is happening on the network. So, the scams and hacking are completely reduced. At the same time, it happens in real-time without any delay. 

3. Functionality for Automation:

It is configurable and can automatically create structured actions, events, and payouts when the trigger conditions are met.

Types of Blockchain:

There are four categories of blockchain, such as,

1. Public blockchain:

This is the first blockchain used in the market and is commonly used in crypto. Here, the security level is high when compared to centralized servers. It increases the security and transparency of the network, and no data stored in the blockchain can be altered or changed.

It uses the PoW and PoS consensus methods to verify the transaction. The public blockchains are independent, and anyone can access them from anywhere, so dumping the system is impossible. This public blockchain is probably used in cryptos alone. 

2. Private blockchain:

This is used within the organization and is known as permissioned blockchain. It has the same advantages as public blockchains, such as peer-to-peer and decentralization, but is used in a small industry.

Private blockchain ensures that no third parties can access our information. Here, the transaction speed is higher than on the public blockchain because the size of the block is small. So, validation will take place at once. 

3. Hybrid blockchain:

It combines both public and private blockchain technology. It enables organizations to create a private authorization system along with public access to particular data stored in the blockchain and allows them to control it. In a hybrid blockchain, transactions and logs are not publicly disclosed but can be substantiated by granting smart contracts.

Transaction fees are low and fast, and its liquidity is better than any other blockchain network. This hybrid blockchain uses government data, medical records, real estate, and financial services. Here, 51% of attacks are impossible.

4. Consortium blockchain:

It is similar to the hybrid blockchain but used in decentralized networks. The Consortium blockchain, also known as the federated blockchain, is a private blockchain with limited exposure to a specific group, thereby minimizing the risks associated with a private blockchain whose network is controlled by just one organization.

A validator node initiates, receives, and validates transactions. A consortium blockchain is more safe, high in liquidity, and effective. This type of blockchain has two applications: banking and payments. Different banks can form a consortium and decide which nodes will confirm the transactions.

Blockchain technology has nearly limitless implementations in almost every industry. Users can use it wisely to improve their security level in the organization.