Blockchain and Everything You Need to know About It
- Blockchain’s decentralized framework helps in recording the transaction and gaining consensus further in order to implement a safer and immutable transaction
- Every party involved in the transaction has transparency and traceability to the transaction, and mechanism of the Blockchain ensures security and efficiency.
Blockchain transactions are decentralized without any third party intervention. Various protocols involved in the transaction, like Hyperledger Fabric, eventually help in maintaining integrity, and consensus mechanisms further help in strengthening decentralization.
Evolution of Blockchain
The Evolution of Blockchain goes back to the 1970s, when computer scientist Ralph Merkle patented something he labeled ‘Hash tree’ or ‘Merkle tree,’ which were created using cryptography. These trees were structures that could store data by linking blocks. In the 1990s, Using the concept of Merkle trees, two computer scientists, Stuart Haber and Scott Stornetta, imposed a system or a set of commands through which document timestamps could not be tampered with. This was pretty much the advent of the dynamic innovation blockchain, and it has kept evolving since then
In 2008, the first ever cryptocurrency came into being, popularly known as ‘Bitcoin’. It is considered a first generation evolution, and an anonymous individual or a group of people known only by the name Satoshi Nakamoto created it by transforming Blockchain into its modern form. Many of the features of this Bitcoin Blockchain model remain the core and blueprint of blockchain technology even today.
Second generation evolution saw Smart Contracts’ as a new addition to the dynamic transformation of this technology. Ethereum founders did asset transfer transactions using Blockchain and discovered that Blockchain can facilitate this feature through the significant use of smart contracts.
Functioning of Blockchain Transactions
It’s important to understand the operations involved in a Blockchain transaction in order to grasp them pertinently. Initially, a transaction is initiated when a customer starts a transaction by creating a digital message that contains specific information about the sender, receiver, and the revenue details that are being transferred.
After the credentials are collected, through the authentication of a digital signature,the legitimacy of the transaction is checked, and the possession of money that the sender has is verified. The collection of chains of blocks, which are basically the accumulation of verified transactions, is done using cryptographic techniques. This collection is linked in a respective order using the consensus mechanism of PoW (Proof of Work) or PoS (Proof of Stake). After the agreement of all the nodes, sequences of transactions within a block are decided
Once the block is created, it is broadcast to the community for validation. The preset rules, methods, default algorithm, and nodes within the network independently validate the transactions within the block. Once the mechanism accepts it, the block is added to the Blockchain and eventually confirmed. This whole process happens pretty much in an automated way, without any intervention from third parties or middlemen.
Conclusion
Every transaction that happens within a blockchain has complete transparency and accessibility for all network participants. Transaction costs get cheaper as there is no middleman, and cross-border trade can happen effectively without any delay. One can be assured of security, and the decentralized structure makes the process simple.
