The idea of the blockchain started in 1991 AD, when Stuart Haber and W. Scott Stornita developed it, but they failed to implement it in practice because users were able to copy digital transactions.
In 2011, cryptocurrencies began to be used in applications related to cash transactions, currency conversion systems and digital payments appeared in 2013, and soon after smart contracts, developments in the field continued to this moment, to include market consolidation contracts and other sub-developments. Bitcoin and blockchain have provided a consistent set of mechanical rules, and with the rise in bitcoin popularity, other cryptocurrencies followed by their blockchain applications, causing increased interest in block chains across industries and applications.
Blockchain is a security method through which blocks of information are created with the transactional records that a person makes. As more transactions take place, more blocks are formed and each one is linked to its predecessor by means of a cryptographic code, allowing information to be recovered if it is lost and verified that it has not been changed.
This is only the beginning, since up to this point the information blocks could be modified and altered. But what if copies of these blocks are distributed across an entire network? It would be the consensus among all these distributed blocks that will allow modifying them and altering a few would not imply a risk because it depends on the entire chain. This is what makes bitcoin a secure currency, its livelihood on the blockchain.
How Does Blockchain Technology Work?
A series of blocks (as its name indicates) consists of a group of serial blocks that contain digital information. These blocks are related to each other in the chain according to certain mechanisms, and they cannot then be modified or deleted. In financial transactions, for example, the block stores information about the transaction such as date, time, and amount for the last purchase, and it is recorded using a unique “digital signature” similar to the user name, without any explicit identifying information. Depending on the size of the parameters, up to 1MB of data can be stored in a single block within the block chain.
When storing a new block of data that is added to the block chain, to complete this addition, four steps must take place: For example, to make a financial transaction, such as an online purchase. Verifying this transaction: By comparing the records in a network of thousands or millions of computers around the world, once the transaction occurs, these computers accelerate to verify that the transaction confirms the purchase details.
The block is given a “hash” function to add it within the block chain: this function acts as a unique identifier for the block, and later helps to detect any manipulation that may occur with the block information.
When this block is added to the block chain, it becomes available to all, and its information, including the time and place of the transaction and the parties involved, can be reviewed. Information saved on the block chain is available as a continuous and consistent database. Hence the first and most prominent benefits of blockchain technology are that its records are public and easily verifiable, and anyone on the Internet can access them. The block chain database is not stored primarily in one place, which makes it difficult to penetrate and highly secure.
The high transparency that allows traceability of data, while providing a high degree of privacy, where the identity of the person is hidden through a complex encryption and represented only by its public address. If you are looking for a person’s transaction history, you will not find information that clearly identifies you personally.
Every new block is built on the accuracy shared with the last block. Therefore, anyone who tries to manipulate and edit data in a deceptive way will have to edit all the previous blocks as well, and even all the blocks through Network, this is the high-security secret of blockchain technology.
Although the use of Bitcoin Banker technologies is still in its early stages, research is in progress as a new type of distributed data environment that can be used for many applications of virtual network systems.