In 2008, a cryptographer who goes by the pseudonym Satoshi Nakamoto created a crypto-currency called bitcoin. Bitcoin is digital currency that allows you to perform peer-to-peer transactions without the help of a third party such as banks. This happen because of blockchain technology .
What is blockchain ?
A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.
How does blockchain Technology Work?
blockchain enables two entities that do not know each other to agree that something is true without the need of a third party. As opposed to writing entries into a single sheet of paper, a blockchain is a distributed database that takes a number of inputs and places them into a block. Each block is then 'chained' to the next block using a cryptographic signature. This allows blockchains to be used as a ledger which is accessible by anyone with permission to do so.
Here is a simple example. A wants to send money to B. A initiates the process, and in blockchain terminology, this transaction is represented online as a block. The block is then broadcast to every entity involved in the network for authenticity and approval. The entities approve if the transaction is valid. The block will then be added to the chain which provides a permanent and transparent record like a ledger of transactions and the money moves to B. In this process there is no physical currency involved but just the acknowledgment of the change of ownership.
Effectively a blockchain is a kind of independent, transparent, and permanent database coexisting in multiple locations and shared by a community. This is why it’s sometimes referred to as a mutual distributed ledger.
Benefits of blockchain .
Blockchain is public ledger system, so blockchain records and validate every transaction made, which makes
it reliable and secure.
Blockchain does not need any centralized system or third party.
Blockchain is decentralized system therefore it is not control by any authority. Blockchain has shared control by its users.