What is Blockchain Technology and How Does it Work in the Crypto World

What is Blockchain Technology and How Does it Work in the Crypto World?

What is Blockchain Technology and How Does it Work in the Crypto World – The popularity of Cryptocurrencies / cryptocurrencies has indeed continued to accelerate in recent years, this is certainly influenced by many factors. Well, in this crypto digital transaction there is the term Blockchain. What is Blockchain and how does it work?

For those who are new to the crypto world, discussing the meaning of Blockchain and how it works, of course, it is necessary to know so that in the future they can better understand when making cryptocurrency transactions such as Bitcoin or Dogecoin.

Understanding Blockchain

Blockchain is a distributed and decentralized ledger whose function is to record digital asset sources and the data cannot be modified. The information in it can also be accessed by anyone who wants to see it.

Blockchain is also often referred to as Distributed Ledger Technology (DLT), where digital asset information recorded in it cannot be changed and transparent (can be accessed by anyone who wants to see) through the use of decentralization and cryptographic hashing.

A simple example to understand blockchain technology is like Google Doc. When you create a document in Google Doc, then share the link to a group of people, the document is distributed, not copied or sent. This creates a decentralized distribution chain that allows everyone to access documents at the same time. Nothing is blocked waiting for changes from third parties, while all document modifications are recorded in real time, making changes completely transparent.

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But the reality is the way Blockchain works is more complicated than Google Doc, but the analogy is as simple as that. So, it can be said that Blockchain Technology is very promising and revolutionary because it can help reduce the risk of fraud and also provide measurable transparency for various uses.

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How Blockchain Technology Works

How Does Blockchain Technology Work? reported from the builtin.com/blockchain page, Tuesday (12/10/2021) Blockchain consists of three important concepts: blocks, nodes and miners.

Blocks

Each chain consists of several blocks and each block has three basic elements:

  1. Data in blocks.
  2. A 32-bit integer is called a nonce. A nonce is generated randomly when a block is created, which then generates a hash of the block header.
  3. The hash is a 256-bit number embedded in the nonce. starting with many (i.e. very small) zeros.
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When the first block of a string is generated, the nonce generates a cryptographic hash. The data in the block is forever signed and bound to a nonce and a hash unless it is mined.

Miners

Miners create new blocks on the chain through a process called mining. In blockchain, each block has a unique nonce and hash, but it also refers to the hash of the previous block in the chain, so mining blocks is not easy, especially on large chains.

These miners use special software to solve the very complex math problem of finding asymmetric numbers that produce acceptable hashes. Since the nonce value is only 32 bits and the hash value is 256, there are about four billion nonce sets that must be mined before the correct set is found. When that happens, the miners are said to have found the “golden mark” and their mobs are added to the chain.

Nodes

One of the most important concepts in blockchain technology is decentralization. No single computer or organization can own the chain. Instead, it is a ledger that is distributed across the connected nodes on the chain. A node can be any electronic device that stores a copy of the blockchain and keeps the network functioning.

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Each node has its own version of the blockchain and the network must algorithmically approve each newly mined block to the chain to be updated, trusted and verified. Since the blockchain is transparent, every action in the ledger can be easily checked and viewed. Each participant is assigned a unique alphanumeric identification number indicating their transaction.

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The combination of public information and a blockchain system of checks and balances helps maintain integrity and create trust among users. Basically, blockchain can be thought of as trust scalability across technologies.

Learn also how the History of Blockchain was founded in early 2008 and how this technology evolved into a secret data exchange tool whose use is unlimited.