How Does Blockchain Technology Work? - Business Media Group
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How Does Blockchain Technology Work?

Bitcoin, Ethereum, dogecoin, and many countless cryptocurrencies are the digital face of online currency. They have made a place of their own with their decentralized finance system. The cryptocurrency market works like the stock market where different currencies are like different products having their prices being fluctuated on daily basis. Actually, cryptocurrency prices are changing every minute in the online digital world.

In this digital era, cryptocurrency has become a secure reliable way of online currency storage. These coins work in a decentralized finance system. This decentralized finance system runs on a technology known to us as Blockchain Technology.  Here we will talk about what this blockchain technology is and how does this technology make cryptocurrency is more secure.

What Is Blockchain

The blockchain is a record of all transactions, stored and shared publicly. The so-called miners are responsible for verifying these transactions. After that, they are included in the chain and distributed to the nodes that make up the network.

Let’s talk about some of the key elements of blockchain technology to better understand how this technology works.

Blocks

What is a block? The simple answer is that a block is a set of transactions. Each one is part of the blockchain. The Bit2me company, which specialized in Bitcoin and its technology, defines each of the parts that make up a block:

There are two alphanumeric codes that link the previous block and the next block. The other thing is the “package” of transactions that it includes (the number of which is determined by different factors).

What the next block in progress is trying to do is find out with calculations the alphanumeric code that allowed the previous block to link to this one.

What is Blockchain Technology and How Does It Work? [Updated] | Simplilearn

Miners

Miners are computers/chips that are responsible for verifying all transactions. When someone completes a block or makes a transaction, they receive a reward in the form of Bitcoins.

Nodes

A node is a computer/chip that is connected to the Bitcoin network. It is dedicated to storing and distributing an up-to-date copy of the blockchain. Therefore, each new block that is confirmed is added to the chain of blocks and to the copy that each node stores.

Blockchain Types

Blockchain technology has evolved by leaps and bounds over the last 10 years and the powerful capacity for innovation in data documentation and storage procedures has not gone unnoticed by governments and private companies. That is why they have also wanted to implement private blockchain networks (with restricted access).

We are going to go over the different types of blockchains that exist in relation to where it runs and who has access to it.

Public Blockchain

These are the best-known examples such as Bitcoin and Ethereum. Being public means that they are accessible to any user in the world (they only need a computer and an internet connection). The counterpart of a public blockchain is its security management, since the greater the number of users, the higher the level of security we will need. This is where the consensus protocols and security measures that we will see later come into play.

Read More About: What is Decentralized Finance (DeFi)?

Private Blockchain

Private blockchains are characterized by the fact that, unlike public ones, access to it depends on a central unit (company, organization, or individual). The elements are the same as in a public blockchain. One of the best-known examples of private blockchains is the Hyperledger network.

When a blockchain network is private (no public access) but its access and control are in the hands of a group of companies/individuals it is known as a blockchain consortium.

Blockchain technology is a safe and secure way of having transactions in the crypto world and it is rapidly getting popular with the mainstream banking networks because of the decentralized finance system that makes it transparent and trustworthy.

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