The basics of blockchain for newcomers Jesse N. March 9, 2022
The basics of blockchain for newcomers

Along with the “dizzy” development of information technology, the emergence of the blockchain platform has become a new trend widely applied to industries such as finance and banking, electronics and telecommunications, accounting. audit or retail. So in this article, we will provide blockchain basics for newcomers.

What is blockchain and blockchain technology?

Blockchain is a database system in the form of a block that allows securely storing and transmitting information linked together by extremely complex cryptographic algorithms. In other words, it is seen as a ledger of the company where all activities related to the company’s currency are closely monitored.

In the field of technology, it is a book that stores digital data. Blockchain technology is the concept or protocol behind the operation of the blockchain. This technology makes cryptocurrencies (cryptographically secure digital currencies) like Bitcoin work like the Internet makes email.

What is blockchain and blockchain technology?

Types of blockchain

Public Blockchains

The public blockchain system allows anyone to write and read data on the blockchain. Transactions on the public blockchain require validation by thousands of participating nodes. Therefore, it is extremely difficult to attack this system and costs an extremely large amount of money. These public blockchains use proof-of-work or proof-of-stake consensus mechanisms. The 2 common examples of public blockchains are Bitcoin and Ethereum (ETH) blockchains.

Private Blockchains

For a private system, only the user has the right to read the data, not the written permission because this belongs to an absolutely trusted third party. Since this is private, the transaction confirmation time is extremely fast because only a few devices are required to participate in the transaction validation. For example, Ripple or Hyperledger is a private and licensed blockchain.

Hybrid Blockchains or Consortiums

Consortiums are a form of private blockchain but add some other special features. A consortium can be called a combination of public and private blockchains. For example, banks or joint venture financial institutions will use their own blockchain or Energy Web Foundation, Dragonchain, and R3. 

Sidechains

A sidechain is a blockchain running parallel to the main chain. It permits clients to move computerized resources between two distinctive blockchains and makes strides in versatility and proficiency. An illustration of a sidechain is the Fluid Arrange.

How does it work

When it comes to blockchain, people might immediately think of transactions. Traditionally, transactions are stored in ledgers that are locked and isolated to ensure their accuracy and inviolability. When operating transactions, each agency and unit must maintain its own records to verify information independently. In contrast to this type of communication, it is also a ledger, but the difference is that trust is built-in. In other words, it is a distributed, shared and trusted consensus ledger; it thus forms a highly trusted digital ledger in which transactions are recorded, especially this ledger is maintained within and between network participants. Unlike the traditional method of having many independent and isolated ledgers, in blockchain, a single record is shared with each party participating in the transaction. Each transaction that has occurred or is pending is grouped and stored in a fixed structure called a block. Through the consensus protocol, when each block is confirmed to be correct and trustworthy, the block is linked to the chain (Chain) and sent to copies (Copy) of the distributed ledger and hosted by each network member.

Benefits of blockchains 

With 3 major versions, each version will have a different advanced use.

1.0 technology with applications mainly in currency and payment. The main use of this version is to deal with works related to cryptocurrencies, including currency conversion, remittances and the creation of electronic payment systems. This is also the most familiar area to us. Sometimes quite a lot of people mistakenly believe that Bitcoin and Blockchain are the same. 

2.0 technology with financial and market applications. This version is designed for banking and financial processing applications such as the scaling of Blockchain, adoption of financial and market platforms. Assets include shares, checks, debits, title, and any information related to an agreement or contract.

3.0 technology has applications in design and operation monitoring. This version helps Blockchain move beyond finance, and into sectors like education, government, healthcare, and arts.

Conclusion

The above article has provided detailed information about the basics of Blockchain so that you can have an overview and easier visualization of this technology platform.

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