The Blockchain Technology and cryptocurrency. Blockchain technology was first known to men when first of cryptocurrency-Bitcoin was created in 2009. Real name of its inventor is still unknown to the world. People know him with a virtual name as Satoshi Nakamoto. The whole idea of the the cryptocurrency is based upon blockchain technology. If a person want to deal in cryptocurrency its not compulsory for him to understand the whole idea of blockchain. It is basically the backbone algorithm in virtual currency.
Blockchain is just like data base. Think of data base the first idea comes in our mind that architecture will consist of a centralized sever in which all of the data and record will be saved. But blockchain is not like that, blockchain is based upon decentralized and peer to peer network. As Don and Alex Tapscott says:
“The block chain is an incorruptible digital ledger of electronic transactions that can be programmed to record not only financial transactions but virtually everything of linfe “
Blocks are the building block of blockchain network. A block contain three things:
- Hash of previous block/ Pointer towards previous block
The Blockchain Technology and Cryptocurrency
Data structure stored inside the block depends the type of blockchain for example Bitcoin block has the information like sender, receiver and the amount of transaction. Then the block has Hash which is basically a function you will get its idea if you compare it with finger print. As the finger print of each person on planet earth is different the hash of each block is unique. The hash is calculated for the block at the time when it is created. Each block also contain a hash of the previous block which makes it a chain and distributed network where all the blocks are connected to each other.
Blocks are very resistant to forceful changes. First it is almost impossible to alter the data in block but if somehow any body does it than its hash will also be automatically updated according to the data and this hash information will not be linked with the following block so as a result this block will be out of the network. As blockchain is peer to peer network so every peer has information of all the block in the network. When a new block is created all the peers in the network receives the block and then verify that it is not tampered and if every thing is verified each peer add it to its blockchain.
When someone requests a transaction it is broadcast along the network and each peer or node becomes aware of the transaction request. Nodes then uses some known algorithms to find the status of user and validate the transaction. A verified transaction can contain cryptocurrency, contracts or some other information. Once all these things are verified the transaction is then recorded in ledgers and a new block is created and then added to the chain and transaction is complete.