Blockchain is the technology that underpins digital cryptocurrency. Bitcoin. The blockchain is a decentralized database that stores and shares records of all transactions or digital events that have occurred. Each transaction is double-checked by the majority of the system’s members. It holds every single transaction’s record. Crypto compare – Bitcoin is the most widely used cryptocurrency and a blockchain example in all crypto trading platforms.
How would you explain Blockchain to a non-technical person?
Blockchain is a technology that is decentralized. It’s a distributed database that stores information in blocks. These blocks are linked together to form a chain, with each block including a timestamp and a link to the block before it. Every node in the blockchain network receives a copy of the entire database, and there is no single point of failure.
What advantages does Blockchain provide?
- Blockchain is a technology that is decentralized. The network is not managed by a central controlling entity. Rather, each node has a copy of the ledger and contributes to the Blockchain network’s upkeep.
- Immutable: A blockchain’s data cannot be changed or manipulated. When a transaction is entered into the ledger, it stays there indefinitely.
- Security: Blockchain provides data security since it is difficult to hack. By this, we mean that the data block is only added to the chain once it has been validated by more than half of the participating nodes. It employs a strong encryption technique, such as SHA-256, to add an extra layer of security.
- The ledger is the record of transactions made, and it is called an open ledger since it is viewable to everyone. The ledger is duplicated on every node in the network. As a result, there is trust among participants since they can see exactly what is going on in the network.
- Blockchain’s consensus mechanism is based on some consensus protocols. A consensus algorithm is a method through which all nodes in a Blockchain network reach a consensus on the current state of the distributed ledger.
What is the Blockchain Consensus Mechanism?
The blockchain network is governed by consensus, which is a set of protocols. It ensures that no duplicate blocks are added to the chain, and that the block is only added once all other nodes in the network have agreed on it. It aids in the establishment of peer node reliability and trust.
There are a variety of consensus algorithms to choose from:
- Proof of Work (PoW)
- Proof of Stake (PoS)
- Proof of Elapsed Time
- Proof of Capacity
- Proof of Burn
What are Smart Contracts and why are they important?
Smart Contracts are lines of code that are automatically executed on the blockchain. They specify how a transaction must be conducted between parties under specified circumstances. It’s essentially a blockchain network’s digital contract.
How do you add blocks to a Blockchain?
Mining is the process of adding blocks to the blockchain. When a transaction is completed, the associated block is formed, which must be validated by more than half of the network’s nodes (at least 51 percent). The block is then broadcast to the entire network and added to the blockchain once it has been confirmed.