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Blockchain Technology and Bitcoin

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I am Lakshmi. I've completed my graduation in the stream of ECE. I love reading and like to listen more than I speak up.

What is Blockchain?

Blockchain is a public ledger that stores digital data where it may be anything like personal data, transaction details, or any product details, etc., in blocks, and those blocks are linked together through a hash key. It maintains and transfers the data without the involvement of a third party. Say, for example, there are five people involving in a business, each one's device acts as a node, and each node will have the database. The processing of data is transparent to all five of them, but they are not able to tamper with it. Instead, they can add the record as a new block in a blockchain.

Bitcoin and Blockchain technology

Bitcoin is a cryptocurrency or digital money introduced in 2009 by a mysterious person or a group of people using the name Satoshi Nakamoto. It ensures a decentralized money transaction at a low cost when compared with the traditional online payment system. Over a lakh merchants are using bitcoins for their trade and business and, we can even convert it into cash in a cryptocurrency exchange. Any government or banks do not own Bitcoins and is completely powered by the users. All you need to have is a bitcoin wallet app on your device. Behind the scene, a database architecture called blockchain keeps the record of every transaction and makes it secure with the help of some cryptographic algorithms. This database is transparent to every user on a network, and a huge computing power verifies each transaction to avoid duplication.

How Secure is Blockchain?

Blockchain ensures security on data processing with the help of two concepts called hashing and Proof of Work. Each block will have its own unique signature called a hash key, any change inside the block will cause a hash to change. Furthermore, every block will also have the hash of its previous block, so if anyone tries to make a change in one block, it will make all the consequent blocks invalid.

Another concept that assures confidentiality in the blockchain is Proof of Work. This mechanism delays the process of creating a new block by providing a complex computational problem to solve. Probably, it will take at least 10 minutes to solve this proof of work. If anyone tries to modify the hash of one block, he needs to create and add all the succeeding blocks by recalculating the PoW.

Even if anyone creates a new block by overcoming the above hurdles, it is sent out to the distributed network of blockchain for verification and, if everyone makes sure that that block hasn't been altered, it will be added to the blockchain.

What is Mining in Blockchain?

The user on the blockchain network who owns the entire blockchain ledger and mining software in their device can act as miners, the device should have a powerful GPU, and huge memory space to handle the complete blockchain ledger. Mining is a process of verifying each block when it adds to the blockchain. In terms of Bitcoin, Mining is the concept involves in releasing or mining a new coin by adding transaction records and preventing double-spending(spending the same money twice). A miner should have great computing power to be able to solve the Proof of Work problem. They are the decentralized authority of blockchain. They will get a reward as a bitcoin for their work. There are a total of 21 million bitcoins, in that around 88% of bitcoins have already been issued.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Lakshmi

Comments

Lakshmi (author) from Chennai on November 18, 2020:

Thank you liz westwood for your kind words,i am glad to hear that this article gives you the better understanding of Bitcoin and the technology behind it.

Liz Westwood from UK on November 18, 2020:

I have heard the words 'bitcoin', 'blockchain' and 'mining' in connection with them before, but I did not understand them very well. Your article explains a lot.

Lakshmi (author) from Chennai on November 18, 2020:

Hi,thank you for your kind words and glad to know that the article is informative to you.

Sp Greaney from Ireland on November 18, 2020:

Your explanation of this is really good. I'm still a bit bewildered by this whole new currency. It's good to know that are security measures in place protect customers.