What is blockchain technology – Beginner’s Guide 101

If you've been involved in banking, investing, or cryptocurrencies for a long time, you've most likely heard of the word “blockchain.” It is, without a doubt, a record-keeping system that operates behind the bitcoin network. This essay will teach you all you need to know about blockchain technology and how it works. If you are new to this, this guide will be the value bundle guide for you. In this post, we will be discussing Blockchain Technology from a Beginner’s perspective. We'll see what is a blockchain, how it functions, uses, pros, cons, & many more.

BlockChain Technology

What exactly is a blockchain?

Blockchain is a digital ledger in which each transaction is recorded in chronological sequence onto a blockchain, with the preceding block filled with data from all transactions. It's a type of database that can't be hacked or viewed by anybody other than network members, making it the most secure way to keep correct data.

How does blockchain work?

Blockchain technology is based on three factors that can make or ruin the blockchain system.

(i) Blocks

(ii) Nodes

(iii) Miners

Blocks –Each chain in the blockchain is linked to several blocks that contain transaction data.

Each block also contains a few needed components, which are as follows:

  • Data in the block
  • Hash
  • Nonce

Data – Data is a record of transactions that have been recorded on the block.

Hash – Any block's hash is a 256-bit reference number.

Nonce – A nonce is a 32-bit number that is generated at random whenever a block is registered on a blockchain. Your nonce number will change every time someone updates a block on the blockchain, making it hard to hack because one block is generated every 10 minutes, along with the hash number.

Nodes – Node is a cross-platform runtime that connects to the P2P protocol, allowing them to communicate inside the network in order to share information and validate it before it is included in the block.

Miners – Miners have the most difficult task of creating new blocks through mining. Miners employ specialized software to tackle complicated arithmetic problems, which alleviates stress. When a block is successfully mined, the miner is compensated, and the blockchain is updated.

Decentralized exchange (De-Fi) –  De-fi is a blockchain finance system that does not rely on and disrupts middlemen such as banks and brokerages. In today's society, all financial services operate as centralized finance or Ce-Fi for short.

Every transaction that occurs on the Ce-Fi system is overseen by someone, such as an organization or individual that provides these services. This increases the likelihood of corruption or fraud.

Blockchain vs Bank

How does blockchain exceed banks?

1. Open hours 

Bank – Banks are directly compared to blockchain technology. Blockchain is more convenient and safe than banks. Let's look at some parallels between blockchain and banks. Most of the banks are open Monday to Friday from 9:00 a.m. to 5:00 p.m., while some are also open on weekends for limited hours.

Blockchain – It is open 24/7 & 365 days.

2. Required things 

Bank – Bank account information, a government-issued ID, and a mobile phone or laptop are all required.

Blockchain – A mobile phone or a laptop with an internet connection is required.

3. Transaction fees 

Bank – Transaction costs vary depending on the type of bank payment method used.

Checks – Check processing fees range from $1 to $30, depending on your local bank.

Card payments – These card payment costs are deducted from the transaction and paid to the payment processor by retailers rather than the users directly.

Blockchain – Because blockchain is an open marketplace, users can choose to pay a price ranging from $0 to $50.

4.Transaction speed 

Bank – With the exception of weekends and bank holidays, the transaction takes between 24-72 hours to complete.

Blockchain – If the network has certain issues, the transaction can be completed in as little as 15 minutes and as long as an hour.

5. Privacy

Bank – Because the bank is a Ce-Fi banking system, all bank account credentials are stored on the bank server as well as the owner. The privacy of the bank is dependent on the security of the bank server and how responsible the owner is.

Blockchain – Bitcoins, like the Ce-Fi system's fiat money, are traceable, but no one can ever get possession of them, and they are absolutely safe.

Uses of Blockchain 

We are all aware that blockchain is a digital ledger in which every transaction data is stored. Blockchain is being used in a variety of businesses, not just as a digital ledger.

The following are some of the industries and how blockchain is strengthening them:

Food Industry

Because of dangerous elements being introduced into food, food traceability has been a critical step to keep it safe, and blockchain assisted in that tracking from the supplier to the consumer.

Nestle, Walmart, and Tyson are among the food businesses that have begun to use blockchain technology.

Banking

Banking and finance is the mainstream for which blockchain was designed. The majority of the benefits of blockchains can only be employed by banks and financial institutions since they will boost speed, efficiency, and client retention by providing a pleasing service.

Healthcare

Blockchain can also find a home in healthcare facilities, where it can be used to store patient medical records and make them secure using a private key so that only those with access to them can access them. This also assures that the patient's medical record cannot be altered.

Voting

Every time an election is held, there is a risk of fraud and volatility. Using blockchain for this purpose can minimize the risk of fraud and recounts while also increasing transparency.

Blockchain

Pros & Cons of Blockchain

Everything has advantages and disadvantages. Similarly, blockchain offers various advantages and disadvantages. Let's talk about them.

Pros of Blockchain Technology

  • Lower transactional fee cost — The fee per transaction is lower than with Ce-Fi technology-enabled.
  • Third-party verification cost reduction — The user pays a bank to validate their transaction or any other third-party verification required in other services. The fees you pay to third parties for a particular service will reduce the use of blockchain technology.
  • Transactions are completed swiftly since there are no third parties to meddle with.
  • More secure — This is far more secure against money laundering and fraud, which are common in banks' financial services.
  • Every time a transaction is made, the nodes validate it and record it in a block, altering the hashcode and making it secure.

Cons of Blockchain Technology

  • The complicated process of signature verification — Digital signatures are an identity of a wallet composed of methods such as public-key cryptography, in which a user's own public and private keys create a new digital signature.
  • Although this procedure is complicated, it is critical for the security of your money.
  • High energy usage – Mining cryptocurrency requires a significant amount of electricity. Bitcoin typically consumes 80 terawatt-hours of power every year.
  • It becomes a Slower process when there is a lot of traffic on the server – If there are a lot of users on the server at the same time, the transaction process will be slower.
  • High implementation cost – The implementation cost to mine bitcoin and blocks is significant, as is the miner's payment in coins after establishing a block, and it becomes a bother when the crypto coin's market price is rubbed bearishly.

Is blockchain really safe?

Although blockchain technology cannot be hacked since the nonce and hash are constantly changing, making it hard to break, the possibility of a private network being hacked remains.

The private network has an invitation-only system, so there is less traffic, so there is a chance of the private network being hacked, whereas public networks like Bitcoin or are public networks, so there is more traffic, which means more people are checking each other's work and calling out bad actors.

How blockchain security saves us from double-spending?

A malicious assault in which a user spends the bitcoin more than once is known as double-spending. This assault cannot be carried out with cash or fiat currencies, but it is conceivable in cryptocurrency to use the same coin several times until the network figures it out.

Blockchain technology resists this assault because if a user makes a transaction, all nodes and computer networks must validate that transaction for it to take place. If someone tries to use the same coin twice, the second one will be added to the blockchain's unconfirmed transactions list.

Blockchain

Here are some answers to frequently asked questions about blockchain technology.

Q1. Why blockchain is not widely adopted?

There is also a dearth of information about how to integrate technology for their firm or group. Many individuals are still unfamiliar with this technology, therefore trust difficulties remain.

Q2. Who is the founder of blockchain?

Benjamin Reeves, Nicolas Cary, Peter Smith are the founders of blockchain.

Q3. What is the primary benefit of blockchain?

There are several advantages to using blockchain, the most prominent of which is enhanced inefficiency.

Q4. What are blockchain transaction fees?

When a user conducts a crypto transaction, the blockchain transaction fee is levied.

Q5. What is Private blockchain?

The private blockchain network is an invitation-only network that may only be accessed by those who have received an invitation. Private blockchain networks are typically used by organizations and governments.

Q6. What is Public blockchain?

The public blockchain network was the first to emerge during the blockchain era, and it is open to the public.

Q7. What is Bitcoin?

Bitcoin is digital money that may be purchased, sold, or traded online. You may learn more about bitcoin by clicking here.

Conclusion

Blockchain technology is game-changing. It will make things easier, safer, and simpler. It will alter the way personal information is stored, reducing the risk of hacking, fraud, or hostile attack. Blockchain technology will soon be adopted in every industry as large corporations begin to acquire it in order to remain trustworthy and eliminate information loss.

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