As of the 21st century, the word that has taken the world of technology by a storm is Blockchain. Well then, what exactly is the meaning of a Blockchain? What happens there? Is it safe to use it? All those questions are raised in the minds of the people who are new to this technology. So, here is an overview of what Blockchain actually does.
Transaction processing, accounting, reporting, auditing, and all financial activities in today’s world can be done via a Blockchain. It enables business transactions by effectively recording everything. There is a chain of actions that takes place here. First of all, when the transaction is initiated, everything is recorded such as the date, time, involved parties and amount. Then, the transaction is posted and recorded to the network. A block is present in each network where the transactions are added. Entries added to blocks cannot be deleted and each node in the network has a copy of the ledger of the transaction. The next step is to broadcast the data of the block to every party and their nodes in the network. The network of computer nodes continuously validates and verify by running software that replicates the ledger.
After this, the network validates, verifies, approves, and the confirmation of the transaction is sent to other nodes. As per a mathematical mechanism, the consensus is recorded so as to form the basis of the trust mechanism. Then the confirmed block is added in a linear fashion to the chain in chronological order for an audit trail which is traceable and so as to maintain a transparent record of the transactions. The last step is when the transaction is completed wherein a completed block gives way to the next block in the chain.
Thus, all the transactions are stored in a shared ledger and all participants have access to all the records. Also, soon some media companies will be coming up with ‘Smart Contracts’ based on Blockchain technology which are basically digital contracts that set prices based on various factors.
Blockchain is such a technology that will soon take over the world of digital transactions, and so, it is crucial to have an idea about the new wave of digital innovation.