There is so much buzz around Blockchain technology. This technology has become so popular because it is causing a tremendous change in the world. Stick with me as I delve into what Blockchain is, how it works and what cryptocurrencies are?
What is Blockchain Technology?
Blockchain technology is an accelerated database mechanism that allows information to be shared transparently within a business network. It is known as Distributed Ledger Technology (DLT), and it makes the history of any digital asset unchangeable through decentralization.
Blockchain networks can track orders, payments and accounts accurately. Members also share a view of all the transactions.
How Blockchain works
As the name implies, a blockchain database stores data in blocks and links them together in a chain. The data is chronologically consistent because you cannot modify or delete the chain without permission from the network.
Miners create new blocks on Blockchain through the process called mining. The new additional block augments the verification of the previous block and the entire Blockchain.
What is Cryptocurrency?
Cryptocurrency, also known as crypto, is a digital currency that doesn’t rely on banks to verify transactions. Cryptocurrency is stored in digital wallets. Users can buy crypto from brokers, then keep them before spending them from their wallets.
When you transact using cryptocurrency funds, these transactions are recorded in a public ledger known as Blockchain. It doesn’t have a central or regulating authority; instead, it uses a decentralized system to record transactions and issue new units. There are so many cryptocurrencies, but the most popular is Bitcoin which has been around since 2009.
Pros of Blockchain
This technology provides multiple benefits for anyone willing to use and master it. These benefits include:
- Enables Trust
Blockchain allows people worldwide to cooperate because they are confident that no other party can manipulate transactions or view private information.
- Low Cost of Operation
Blockchain reduces overhead costs because there are no servers to maintain.
It eliminates the need for intermediaries.
- Improved Security & Confidentiality
Blockchain is a secure technology which respects confidentiality. It is decentralized, so no one reserves the right to update or make changes to records at will.
Cons of Blockchain
Although Blockchain technology seems almost perfect, it has its downside.
Blockchains are not as scalable as centralized systems. The rate of the transaction process is dependent on how congested the network system is.
- Power consumption
The power consumption in the Blockchain is high due to mining activities. Since it keeps a real-time ledger and every time, it creates a new node and communicates with the other node simultaneously.
Blockchain is a database mechanism that stores encrypted blocks of data and then chains them together, ensuring they are chronological. At the same time, cryptocurrency is a tradable digital currency built on blockchain technology that only exists online. Blockchain acts as a backbone for cryptocurrency and other cryptos. Blockchain technology is revolving all leading industries today.
This article was written by Lateefat Owolabi; connect with her on Instagram via here
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