A blockchain functions as a decentralized database that is managed by computers belonging to a peer-to-peer (P2P) network. Each of the computers in the distributed network maintains a copy of the ledger to prevent a single point of failure (SPOF) where all copies are updated and validated simultaneously.
Blockchain has outstanding potential for leading the technological innovation in many parts of the economy through its diverse application. Its decentralized nature, delivers high economic benefits as it reduces setup and maintenance costs. Developments are currently underway across a range of business process initiatives such as cyber security, health information sharing, automotive ownership, voting in elections and international trade.
Blocks are madE up of three main parts
Transaction or Event
in the transaction
Unique hash to distinguish them
from other blocks
How does Blockchain work?
A form of transaction or event must occur
The transaction must be verified
The details must be stored in a block
The block must be given its unique hash code
Its transparency means that when a new block is added to the blockchain it becomes publicly available.
This is the core concept and benefit of blockchain. There is no need for a trusted third party or intermediary to validate transactions; instead a consensus mechanism is used to agree on the validity of transactions.
2. Transparent & Trusted
Blockchains are shared by several users which means everyone can see what is on the blockchain, delivering a transparent and trusted system.
3. Difficult to modify data
Once the data has been written into the blockchain, it is extremely difficult to change it back. It is not completely unmodifiable, however this is seen as a benefit in maintaining a trusted and transparent ledger of transactions.
4. Always on
A peer-to-peer network is what drives the blockchain, delivering an extremely resilient service. This is because data is replicated and updated on each and every node. Even if nodes leave the network or become inaccessible, the network as a whole continues to work, making it highly available.
5. Highly Secure
All transactions on a blockchain are cryptographically secured, providing integrity.
It serves as a single shared ledger between relevant users, which reduces the complexity of having to manage separate and multiple systems
7. Faster transactions & settlements of services
There is no lengthy process of verification as the relevant data is already available between the relevant parties