What Is Blockchain: How Did This Technology Come About?

What Is Blockchain: How Did This Technology Come About?

Blockchain: Technology has merged with various market segments and is increasingly closer to finance. This makes it very important to understand what blockchain is.

This new, complex subject naturally raises many doubts about the security involved in this convergence process between money and technology.

The phenomenon of cryptocurrencies is a vast subject these days, but clearly understanding how this new financial universe works and what its rules are is a task that requires attention.

If you no longer want to be left out of this subject and want to understand once and for all what blockchain is, keep reading!

We prepared this article with everything you need to know to understand in detail what blockchain is and how this trend came about.

Follow up!

What Is Blockchain?

Blockchain technology can be thought of as a ledger, a collective record . Hence it comes without a name, translated into Portuguese as a “chain of blocks”.

He is responsible for keeping the record of a virtual currency transaction, or cryptocurrency, ensuring that this information is safe and without any danger of alteration.

We know that among the existing virtual currencies, the most famous and used is bitcoin. This money is stored in digital wallets, which can be online or installed on the computer or cell phone.

In this case, blockchain technology is responsible for recording the number of bitcoins in a given transaction, who sent it, who received the transfer, when it was carried out and how it will be archived.

The first thing to know about blockchain is that this technology’s purpose is to be entirely transparent. In summary, we can say that information is not stored in one place with a blockchain. Unlike being stored on a single computer, all registry information is distributed across multiple linked computers.

How Did Blockchain Come About?

Let’s understand what blockchain is starting from the starting point and how the emergence and evolution of this technology took place. Digging deep into its origins, what we now call blockchain began to take shape back in 1991.

With the development of cryptography and technology improvement, we have arrived at a definition of blockchain today. And let’s understand now how the whole process works.

Blockchain: How Does It Work?

So that you can better understand what blockchain is, we are going to explain in a little more detail how the transaction process works and show you how secure it is.

Follow every step!

Transaction Record

The first step of a transaction is its registration. To help you get a clearer view of this process, think of the blockchain as something similar to an Excel spreadsheet. 

In this worksheet, you must enter vital information such as the transaction’s origin, destination and, of course, the amount. It is essential to say that the “spreadsheet” is available for updates from others as a shared. 

On the other hand, for everything to be safe, it has to be secret. The idea is that it should not be possible to know which other people are involved in the transaction. How to do this?

Cryptography

To make the transaction anonymous and secure, you need to encrypt it. Confidential information must be protected, one of the pillars of information security.

But how to do it? You can create different addresses from a primary key, formed by a set of characters and numbers. So, to make transactions for someone else, you need to know their address. This will cover up the identity of the people involved, both the sender and the receiver.

The primary key, in this sense, is essential and must be kept carefully, as it will allow those involved to assume the properties of the addresses assigned to them.

Validation

The transaction from person X to Y is not made official immediately. It needs to pass validation to be included in the blockchain.

For this, she goes to a temporary area where she undergoes an analysis approximately every 10 minutes. During this period, transactions worldwide in the temporary area are analyzed by a person in charge, called a miner.

This response is nothing more than a computer connected to the blockchain network, which passes through a system where it gains the right to validate pending transactions. Once this is done, he receives a prize in bitcoins.

And so it goes, successively, every 10 minutes. But how does a miner decide if a transaction can be made official? It will check the authenticity of the action and verify that the digital signature is genuine and that there is not someone simulating addresses and transactions in their account.

It is then that the date of the operation is also made official, and the transaction receives a signature that works as an ID for identification, generating new encrypted data.

These elements — digital signature, ID, key and encryption — provide complete security to the transaction process on the blockchain.

Change Blocking

We still have considerable detail to explain. Well, we said earlier that the “spreadsheet” is available for others to make changes to, right? This can be a danger, as person X could erase or change the value of a transaction carried out by person Y, right?

Not really. This is thanks to a little secret that is the basis of all the genius of blockchain. You see, we call a mathematical operation or function a hash. There are many varieties of different hash functions. 

When selecting one of these methods, whenever you make changes to a specific value, it will generate the same simplified sequence of characters and numbers.

Also Read: Understand 5 Advantages Of Blockchain For Businesses

Techno Team

We are a power packed team of cults who love to explore new technologies and bring all latest news to our viewers.

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