Βlockchain is an innovative technology that falls under the umbrella of fintech. It is a network of individuals who can create and share something in common. Their data and information are saved in a digital format. The network is decentralized and evenly distributed, which means that no individual, who belongs to the network, excels over another individual. The initial implementation of blockchain technology was about the evolution of cryptocurrency and particularly Bitcoin, which was the first successful crypto. Cryptocurrencies may be the initiation that will transform money transactions. What is your opinion? Could transactions be revolutionized using crypto?
But why is it called “Block-Chain”
The name comes from the way data gets structured and saved. When blockchain collects the data, it saves it in a structured format, the “Blocks”. Every time a “Block” is filled-up to its storage capacity, it is linked to another “Block” that is already verified. This process creates a “Chain” structure of “Blocks” of transactions and that’s why it is named blockchain technology.
How it works…
Information and data can be created, but the basic principle of blockchain technology is that it can not be edited or deleted. Network members have equal rights and access to the database. Transaction records can’t be changed after a transaction has been recorded in the shared ledger. If there is an error in a transaction, a new one will be performed to reverse the error. After that, both records will be visible. This is the main reason why blockchain is known as Distributed Ledger Technology (DLT). A key component of this technology is a process called cryptography which has different types. It has a crucial role in blockchain and its Network Security.
There are a few types of Blockchain Networks, the main ones are:
1. Public blockchain networks
In public blockchain networks, there is no central authority and anyone can join and participate, for example, Bitcoin. One of the main drawbacks could be the limited privacy of transactions and security issues.
The (usually open source) software of each blockchain platform determines the conditions under which the data will be entered into the registry, how it will be verified, and of course the type of information that will be entered. It also specifies the conditions and the way to create the cryptocurrency (or means of transaction or tokens) that it may foresee. For example, the blockchain technology platform of bitcoin and Ethereum counterparts have the ability to integrate more complex information such as the so-called smart contracts. All these terms of operation are incorporated in the protocol (whitepaper) of each blockchain platform which is available to the public via the internet.
2. Private Blockchain networks
A private blockchain network is typically called a public network. It is decentralized but authority can manage who is allowed to be a network member. Technically we could say that it is not a pure decentralized network and no anyone can operate a full Node, as it allows only selected entries of verified participants to join.
Blockchain technology offers a popular set of consortium innovation solutions to the financial services industry. There are a lot of applications in which blockchain technology is implemented and could potentially completely change many traditional finance patterns like transactions. Fintech is a fast-growing industry and its implementations are slowly changing the digital world, with blockchain leading the way.