Blockchain 101: What Is It And How Does It Work?Oct 24, 2022
Blockchain - perhaps you've heard the buzz about blockchain but were left scratching your head. Perhaps you haven't heard of it. Or perhaps you're more like me, fascinated but overwhelmed.
Blockchain technology has been viewed by many, myself included, as a mysterious and intimidating topic for this reason alone: it sounds complex.
In this article, our goal is to demystify blockchain technology for hesitant but curious beginners like you and me.
Here, you will learn everything you need to have a basic understanding of blockchain, what it is, how it works, and why it matters.
The world is changing and the possibilities are endless. Let's take a deep dive into what blockchain is.
What is Blockchain?
Envision a world in which all financial transactions can be conducted without the need for middlemen like banks or credit card companies. Sounds like a dream, right? Well, it’s not.
Blockchain technology has changed the way transactions work. It wants to provide a safe and secure way to make transactions by using digital currencies that can't be changed by anyone with bad intentions.
A blockchain is a peer-to-peer system with no central authority managing data flow.
The concept might be hard to understand, so let me explain it in more detail:
In a blockchain, data is grouped into blocks. Each block can hold a certain amount of data, and when it is full, it is linked to the block before it, making a chain of data. This is where the name "blockchain" comes from. When new information is added, a new block is made and added to the existing blockchain.
Each completed block in a blockchain system then generates a timestamp. This is an important feature of blockchain.
How Does Blockchain Work?
As previously mentioned, blockchain allows a network of people to share potentially valuable data in a secure way.
The Blockchain Process
- A transaction is requested and the blockchain network verifies it.
- A new block is made to show that this transaction happened.
- Every node (or participant) in the blockchain network receives the new block once it is completed.
- Nodes check that the new block and transaction are correct.
- Typically, nodes are given a reward as a result of a proof-of-work system.
- The new block is added to the blockchain.
- The blockchain update is distributed across the network.
- The transaction is complete.
Will Blockchain Be the Future?
It's safe to say that in the not-too-distant future, blockchain will revolutionize the ways in which companies manage and share sensitive information within their networks. As you can see, there's a lot of potential for blockchain technology, and it's always growing. There has never been a better time to ask yourself, "Why should I learn blockchain?"
With that in mind, any professional should always try to be one step ahead of the game. Which is why the most obvious piece of advice is to learn and understand as much as you can about blockchain, or risk falling behind so far that you lose your competitive edge for good.
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