Instead of going into definitions, let’s just understand a simple process which involves all of the mentioned above.
And to understand this, first,let’s discuss how a Google Spreadsheet or Bank Transaction Work?
So when you share a google spreadsheet and want it to be edited by other person, you WAIT till the other person edits it and send it back to you. In other words, two persons cannot edit it at the same time.
Same is the case with Bank Transaction. Banks lock access to the money debited from your account, till the time, they get confirmation that it has been credited in the target account. As long as the transaction is not confirmed, it can be forged.
“Now imagine, if there is transaction/exchange where more than 2 people/entities are involved. In such cases, to wait for every person/entity to confirm the transaction and then proceeding will become a cumbersome and time taking process, and maintaining the records of transaction in such a process would be difficult, almost impossible.”
Now, let’s throw some light on the reason which makes data available on the internet vulnerable to a cyber-attack. Well in most of the cases, where data is stolen by an external hacker, are those where data is stored in a centralized location.
But what would happen, if the data is not centralized and is shared between networks of computers (called Nodes)! Then, it is next to impossible to alter the data or steal it.
This concept of shared database/distributed database form the basis of Blockchain Technology.
Let’s understand this with this example:
In a Blockchain network, a block of transactions is formed every 10 minutes, in which the network reconciles every transaction that happened in those 10 minutes.
The transaction is known immediately to almost every node in the network, which act as an “administrator” and verify the transaction.
So, from the above discussion, it can be inferred that:
“Blockchain technology allows the digital information to be distributed but not copied, and was originally designed for the most widely used Cryptocurrency i.e. Bitcoin”
Cryptocurrency, like Bitcoin, in simpler words is digital cash which works on the concept decentralized network.
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Depending on the type of units being transferred (i.e. cryptocurrency, records, contacts or other information), the data is either copied or transferred from one account to another.
