As a reminder, blockchain is not bitcoin. Rather it is the technology that powers bitcoin and other crypto-currencies like Ethereum, Litecoin, Dogecoin, etc. Blockchain is not only used for cryptocurrencies.
Blockchain is a type of technology that involves the distribution of a ledger. This ledger contains transactions known as blocks. These blocks are linked in the form of a chain (hence “blockchain”) in such a way that it is updated in every transaction. Additionally, because of the cryptography used, it is impossible to alter or modify any records.
Other uses of blockchain, aside from crypto-currencies, include:
Below are some of the important features of blockchain that make it super!
Data immutability: This is the top-most feature as it ensures that no data is corrupted. How this works is that every node on the system has a copy of the ledger. So, to alter any data, there must be an unanimous agreement of every node. This makes blockchain secure and transparent.
Decentralized: Blockchain is decentralized, meaning that no authority or government, a group of persons, or a single individual controls this technology. Rather, it is a group of nodes that manage the whole transaction.
Single source of truth: In a blockchain, there is only one source of truth, the distributed ledger. So, to know who owns what, or to study a particular transaction, you only need to go to one place.
Transparency or provenance: Every transaction, be it tangible or non-tangible, can be traced from the start to the finish with blockchain.
Consensus algorithm: For a transaction to be accepted and recorded on the blockchain, all the participants or nodes must agree to follow the same rules.
Anonymous: It is true that every transaction is transparent and open to the public, but the actual persons are kept anonymous through the addresses. For example, suppose a person sends a sum of money, the receiver will know that the sender is linked to a bitcoin address, but they will not know the actual address. There are several reasons for this – one of them is privacy.
Blockchain is not bitcoin and does not only power crypto-currencies; rather, it powers the field of healthcare, fraud detection, smart contracts, etc.
We also looked at the important features of crypto-currency, such as its data immutability, decentralization, single source of truth, etc.
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