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Blockchain Basics: Key Things To Know As A Beginner

BLOCKCHAIN BASICS: KEY THINGS TO KNOW AS A BEGINNER WHAT IS A BLOCKCHAIN? A BLOCKCHAIN is a digital ledger of transactions that is distributed among many computers and maintained by a peer-to-peer network. It works by linking sets of data (called "blocks") together into a chain. Copies of this chain are transmitted continuously to all members of the network. PRIVACY AND SECURITY OF BLOCKCHAIN The chronological order of blocks in the blockchain, accompanied by the linking of each new block to the previous one, makes it impossible for hackers to tamper with the ledger. A hacker may be able to tamper with a small number of the copies of the ledger, but will be unable to change all iterations of the ledger because it is distributed to many 3584302 computers. Personal information is not recorded in the blocks. Rather, individuals use a digital signature that represents part of their identity and is also used to verify their blockchain transactions. DIFFERENCES BETWEEN BLOCKCHAIN AND BITCOIN BLOCKCHAIN is the generic name to describe the technology used by Bitcoin and other digital currencies to record and secure transactions. This technology enables a highly-accessible ledger with a greatly reduced risk for fraud or tampering. BITCOIN is among the earliest digital currencies, and it is the oldest surviving digital currency protocol. It was also the first functioning application of blockchain technology. Bitcoin is not necessarily regulated as it is not distributed by any financial institution. Instead, it relies on a decentralized network of individuals to operate the network. Those operators are rewarded for their work and given a fixed number of bitcoins per block every time they successfully process transactions for the other users of the network. They are also paid the transaction fees for every payment that they process. USES OF BLOCKCHAIN Blockchain technology has a variety of uses outside of digital currency. It helps regulatory compliance and auditing by reducing human error when recording data and prevents possible tampering by recording every single action. 10101 ioioi Insurance providers can use blockchain for smart contracts to avoid invalid or multiple claims while maintaining transparency with their clients. The dynamic, immutable, data ledger makes it ideal for real-time monitoring of the shipment of goods or use in time-stamping all kinds of business-relevant events. In government and healthcare, blockchain can reduce the need for physical documents, reduce the likelihood of lost records and safeguard sensitive personal information from unsecured, private databases. The media industry can use blockchain to distribute monetized content, like videos and music, without the need for traditional content delivery systems while still securing the IP rights behind them, all at lowered costs. BREAKING DOWN THE BLOCKCHAIN PROCESS 1. A TRANSACTION IS MADE One party signs a transaction with their keys using wallet software. The transaction is broadcast to the network or directly to the recipient's wallet which will ask validating nodes to verify the transaction. If the network operators do not see an attempt at fraud, the recipient will see an updated balance in their wallet. That new state of the ledger will be recorded in the next block. These processes occur almost instantly. 2. TRANSACTION DATA IS LOGGED AND COMPILED .... INTO A BLOCK Data recorded includes time, date, sending and receiving addresses, the amount of spent bitcoins, and an encrypted hash of the individual's digital signature. (..... 3. THE FINISHED BLOCK IS DISTRIBUTED TO EVERY NODE IN THE BLOCKCHAIN NETWORK Due to its decentralized nature, the finalized block is distributed throughout the network for verification from the other operators of the network, who must come to consensus on the state of the ledger. 4. ALL OPERATORS RUN “NODES" IN THE NETWORK WHICH WORK •• .. TO VERIFY THE BLOCK Network nodes run software which does computational cycles of work toward solving complex math problems required to verify the current block. Once a node solves the block, they are awarded the fees and the predetermined new coins, and the other nodes immediately begin working on the next available block to avoid duplicates. 5. AFTER VERIFICATION, THE BLOCK IS ADDED TO THE CHAIN The completed block receives a unique timestamp and identifying code called a "hash." The block also records the hash of the previous block, creating the immutable quality and orderliness of the blockchain. 6. THE TRANSACTION IS COMPLETE AND IS PART OF THE DIGITAL LEDGER The updates on the blockchain are shared with members of the network. The integrity of the ledger is confirmed by the matching hashes. INFOGRAPHIC BY: COINGEEK SOURCES: | | | ......

Blockchain Basics: Key Things To Know As A Beginner

shared by coingeek548 on Apr 06
Understand the basics of blockchains and its uses for your advantage.




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