Block Chain Technology
Blockchain technology is a transformative innovation that underlies cryptocurrencies like Bitcoin and extends to various applications beyond digital currencies. Here’s a comprehensive overview of blockchain technology.
Blockchain Technology Summary
1. Definition
- Blockchain: A decentralized and distributed digital ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively, ensuring transparency and security.
2. Key Components
- Block: A collection of transactions grouped together. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
- Chain: A sequence of blocks linked together. The blockchain grows as new blocks are added to it.
- Nodes: Computers that participate in the blockchain network, maintaining copies of the blockchain and validating new transactions.
- Cryptographic Hash Function: A mathematical algorithm that converts data into a fixed-size string of characters, which is unique to the data provided.
- Consensus Mechanism: The process through which nodes agree on the state of the blockchain. Common mechanisms include Proof of Work (PoW) and Proof of Stake (PoS).
3. How It Works
- Transaction Initiation: A transaction is created by a participant and broadcasted to the network.
- Transaction Validation: Nodes validate the transaction using consensus mechanisms.
- Block Formation: Validated transactions are grouped into a block.
- Block Validation: The block is validated and linked to the previous block via a cryptographic hash, forming a chain.
- Chain Update: The new block is added to the blockchain and distributed across the network.
