What is Blockchain and How Does it Work?

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what is blockchain

Did you know that blockchain is technology that is increasingly popular in Indonesia? Not only in IT circles, but also the general public. Popularity blockchain itself can not be separated from the benefits offered. However, before discussing more clearly about the advantages, you must first understand what it is blockchain and how it works.

Is Blockchain Really a Data Storage Technology?

Blockchain consists of a combination of two words, namely block which means group and chain which means chain. The naming reflects how it works blockchain which uses computer resources to create blocks that are linked to each other for the purpose of executing transactions.

Just like his name, blockchain is a chain of sequential blocks that are assembled and distributed together. Each block consists of ledger (ledger) and three elements, namely data, hash, and hash of the previous block.

The type of data used in this technology depends on the purpose blockchain itself. For example, in bitcoin the data block contains all transaction details, from the number of coins, the sender, to the recipient.

Hash contains data in the form of a signature or fingerprint or signature. Hash is used to identify the block and its entire contents in a unique code. The hash of the previous block is the part that carries the trail of the previous information while securing the chain blockchain.

Blockchain is new technology developed for digital data storage system. This technology is connected through cryptography and its use itself cannot be separated from Bitcoin and Cryptocurrency.

Although considered modern technology, the initial idea blockchain itself has been coined by Scott in his journal entitled Journal of Cryptography: How to Time-Stamp a Digital Document since 1991.

How Blockchain Works

Blockchain starts when a block receives new information. System blockchain consists of transactions and blocks containing a series of cryptographic hashes and previous block hashes to form a network. Blockchain works by recording information that cannot be changed.

Characteristic blockchain The decentralization of this technology makes it unnecessary to rely on external authorities for validation and integrity of data authenticity. This process is a decentralized process that usually occurs between network nodes to ensure the information is valid.

After the decentralization process, the data will be added into a new block. Each block contains a unique hash or code. Although the average transaction blockchain investment, in fact blockchain can store different types of information in the same block.

Blockchain Utilization

Technology blockchain can be used in the financial sector. The reason is, this technology can be likened to a digital cash book that can be accessed by anyone, anytime, and anywhere easily without the need for approval from a financial institution like a bank.

Technology blockchain indirectly has facilitated the entire transaction process. Transactions are also more secure and transparent so as to minimize data misappropriation, such as bribery or corruption.

Blockchain can also be used in fields other than finance. The proof is that in 2018, McKinsey created a table of odds blockchain for various fields, such as telecommunications, property, media, medical, and agriculture.

Is Cryptocurrency the same as Blockchain?

Cryptocurrency is a dispersed system, over which no one person or company controls it. Blockchain code is not located on a central server operated by a company, but is spread across thousands of computers on the blockchain network.

Blockchain Advantage

So, what makes blockchain liked by various groups? Here are the advantages offered blockchain.

Blockchain technology effectively keeps track of information and transactions. In fact, the system is proven to be safe and transparent. This is because when the transaction takes place, public access can be seen by all parties without the need to login.

Compared to the banking system, the blockchain very different. With applied technology blockchain, neither information nor user funds can be used without the knowledge of the owner.

Databases blockchain character append only, can only add and can not be fixed. As a result, the system blockchain hard to penetrate by hacker.

Blockchain allows users to know the audit trail of assets owned so that the risk of embezzlement of funds can be minimized.

Presence blockchain indirectly eliminate middleman or brokers who often increase transaction costs. Blessing blockchain, all recording and verification activities are directed and immutable.

Remember blockchain is technology that makes it easy for you to transact and maintain data privacy, it never hurts to try it. Don’t forget to share this article, OK!

3 Pillars of Blockchain Technology

Before Bitcoin and BitTorrent existed, we were more used to centralized services. The idea is very simple. You have a centralized entity that stores all the data and you have to interact only with this entity to get any information you need.

Another example of a centralized system is a bank. They keep all your money, and the only way you can pay someone is through the bank.

When you search for something on google, you send a question to the server which then replies to it with relevant information. That is a simple client-server example.

One of the most interesting and misunderstood concepts in blockchain technology is “Transparency”. Some people say that blockchain gives you privacy while some others say it is transparent.

Immutability in the context of Blockchain is that once something enters the Blockchain, it cannot be tampered with or hacked. Can you imagine how valuable something like this is to the Institute of Finance?

Imagine how many cases of corruption or embezzlement of funds could be eliminated if people knew they couldn’t “trick the financial statements” and played with company accounts.

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