How Does Blockchain Work?

The blockchain is made up of a network of computers, these computers are also known as nodes. Blockchain technology is a decentralized computer network used for financial transactions and this makes cheating and fraud impossible because every node on the blockchain network has an exact copy of the same ledger that contains financial deals between two parties. This makes trust possible on the blockchain network. Basically, the blockchain is a digital ledger.

Four Unique Characteristics of Blockchain Technology

These are the four distinctive features that make blockchain technology unique:

1. Immutability of Data
   Once data are stored on the blockchain network, the data are validated and new blocks are created (that is digital ledgers) then contents of the blocks become impossible to manipulate or falsify. If the data of one particular node on the network becomes altered, since records of the same data in form of blocks are on other nodes of the network, the corrupted ledger becomes rejected. This makes it impossible to attack or hack data on the blockchain network.
2. Data Are Distributed
   Blockchain technology is based on a consensus system that allows proper coordination among users without a centralized coordinating body. The chain, that is digital ledger cannot be exclusively owned by one computer, it rather belongs to the entire devices connected to the network.
3. Blockchain Network Is Automated
   Automated programs are needed for blockchain networks because the system is decentralized. Therefore, there are some programs that run automatically in a blockchain when certain expectations are met. These programs are called smart contracts. They are used to instantly execute contracts so that the two parties involved in a deal can get the outcome without any delay or any middleman.
4. Blockchain is Transparent
   Every node or every user of the computer on the network has the access to all transactions on the blockchain network. Every computer has the same copy and it gets automatically updated as new blocks (that is more data) are added to the network.

 

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