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Blockchain for Beginners: What is Blockchain Technology?

With blockchain becoming widely popular, more and more people are showing interest in the technology. The last few years have been a golden period for blockchain technology. Several governments, businesses, and enterprises have started adopting blockchain, increasing its fame. Thus people are interested to learn more about blockchain like never before. A better understanding of blockchain will make you a part of the financial and economical revolution that will happen in the near future.

Beginners will need a simple guide that would explain their blockchain in detail. Here is a starter guide that beginners can make use of.

What is Blockchain?

Blockchain is defined as a peer-to-peer system that makes use of public ledgers for transactions without the interference of third parties like a centralized authority. The Blockchain network is completely decentralized, which means there will be a copy of the digital ledger in each peer. The ledger may include the whole copy or just a minimal copy that would allow it to stay connected and function effectively in the network.

Methods like Proof-of-Stake, Proof-of-Work, and some others are used to maintain harmony across the transactions. Modern cryptographic algorithms are used to secure each transaction. The most important advantages of blockchain technology that attract people are immutability, transparency, and trust, which are completely different from traditional centralized operations.

To summarize, there are peers in the network that can do transactions without the interference of third-party authorities. This simple concept of blockchain is revolutionizing the complete industries across the world. Different industries are trying to make use of blockchain to improve their efficiency. Healthcare sectors are trying to implement blockchain to effectively store the data of patients. Thus it relieves patients from the trouble of carrying all their documents to the doctor for a visit. All the data associated with them will be available on the database that can be accessed with just a few clicks.

Blockchain Architecture

The blockchain architecture has three main components – Blocks, Transactions, and Consensus. Along with these major components, blockchain architecture is of various types like private, public, and consortium blockchain architecture.

  • Block

Blocks are the factors that constitute blockchains. They are stored in a linear pattern where each block will be connected to the previous one. There will be data on each block. The type of blockchain and the way the data is managed determine the data structure stored in the block.

  • Transaction

When a peer sends a message to another in the network, a transaction happens. Transactions are a major part of the blockchain and are the main purpose of blockchain technology. The transaction consists of all the information like the sender, receiver, and the value of the transaction. The transaction of a blockchain is quite similar to credit card transactions, the difference is the lack of central authority in the blockchain. Cryptocurrency is the digital currency that is powered by blockchain for transactions. Bitcoin was the first cryptocurrency that was launched in the market. Read the bitcoins kaufen mit paysafe blog to learn to buy bitcoins using Paysafecard.

  • Consensus

The validating process of transactions is called consensus. The consensus can be different for each blockchain like PoW, PoS, etc. While bitcoin uses the Proof-of-Work method, Ethereum makes use of Proof-of-Stake. There are various other consensuses too that are used in blockchain technology.

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