Blockchain Mechanism for Noobs
The credibility and uniqueness of this technology are generated from its transaction mechanism. In the transaction, each party has a set of two cryptographic keys one public and one private. The combination of these generates a unique digital signature that provides validation and strong ownership to the parties in the transaction. However, for the transaction to be valid and to prevent fraud, it must be observed and validated by a third party. This is where a distributed network is implemented. The transaction is authorized when a majority of users in the network come to a consensus that it has occurred at the said time. The robustness of a blockchain is generated by the vast number of the network’s users. Cryptocurrencies like bitcoin, litecoin are secure and widely used because they possess a huge network of users, and have amassed large computing power. Bitcoin is secured by 3, 500, 000 TH/s which is greater than the combined hash power of the world’s largest 10, 000 banks. Cryptocurrencies attract a large number of users by providing rewards to certain computers that offer their computing power to the network. Blockchains use a decentralized approach for their protocols. The transaction data is sent to all the nodes that independently come up with a mathematical proof, which is analogous to an image of a physical event. The data is converted into a block and added to the chain if a majority of nodes come to the same conclusion, eliminating the need for a central validating authority. The variables and methodology of the addition of blocks can be altered and vary for different blockchain-based technologies and derivatives.
Blockchain – Into the Future
Accounting, transactions, contracts, and records play a pivotal and defining role in our societal system. They protect assets, and organizational boundaries and uphold the promises between institutions, governments, and corporations. Despite their importance, these have failed to digitize in ways other sectors have. Blockchain technology offers a solution to this. But the touted revolutionary technology is much more than just this and we are yet to realize its limitless potential.