Understanding the Basics of Blockchain

Have you been trying to keep up with the latest technology but struggling with all the new terms? There’s deep learning, machine learning, neural networks, blockchain, etc.

It would be challenging to tackle all of these terms in one post, so today, let’s take a moment to talk about blockchain. Blockchain is a newer technology that enables more secure data sharing and information. Let’s begin.

What is Blockchain?

Blockchain is a way of securely recording, storing, and sharing information. What makes blockchain different from all other methods of data storage is that it is extremely difficult to change or hack this style of system.

Think of a blockchain as a digital ledger. It stores data (often transactions) in blocks, linking one set to the next (in a chain). These connections are part of why blockchain data is so secure, as altering one would make it stand out from the group it was initially placed in.

Because of how blockchains function, they are considered a distributed ledger technology. This means that the data stored within have an immutable cryptographic signature (hash).

How Does a Blockchain Work?

The goal of blockchains is to record and share data. This is because the information can be easily accessed but not altered, making it safer than the available alternatives. Blockchain technology combines cryptographic keys (private and public), peer-to-peer networks, and advanced programming to create a secure system.

When data is added to a blockchain, it automatically gets sorted into a group or block. This block will consist of similar data. For example, everything in a block may have been created around the same time or have a similar number range it is working with. These blocks are then chained together, enabling other users to continue adding to a section.

By putting all the data into blocks and chains, the system continues to add security to itself. As mentioned earlier, altered data becomes immediately apparent as it no longer matches the data within a block. The longer this process goes, the more a change will stand out.

Types of Blockchain

There are four types of blockchains: public, private, permissions, and consortium. As the name suggests, public blockchain networks are open to the public. For example, many bitcoin and other cryptocurrencies are based on public blockchains. Private blockchains utilize closed networks, such as a company network.

Permissioned blockchains are also known as hybrid blockchains. They combine private and public functions. Finally, there are consortium blockchains, which have both public and private functions, though, in this instance, they are open to a more significant subset of people or organizations.