What is Blockchain?

by The WebGate

 Overview of Blockchain

Blockchain is a distributed network that comprises shared, immutable nodes of computer connected which make possible transactions and data-keeping. They are mainly used in cryptocurrency for transactions. Examples of cryptocurrencies are; Bitcoin, Ethereum, Litecoin, DogeCoin. 

What is Cryptocurrency?

Cryptocurrency is a digital currency that can verify the transfer of assets from one part to another. It provides anonymity of the transaction and secures financial transactions using cryptography.

Cryptocurrencies use a technology called Blockchain to perform transactions and activities. A blockchain is a continuously growing list of blocks that are linked to each other in the form of a chain, that’s why it is called Blockchain. They are secured using Cryptography. Every coin is hashed and digitally signed. For this article, to explain we will use bitcoin as an example. 

How does Cryptocurrency (Bitcoin) work?

First, a wallet address will have to be created by the parties who want to exchange coins, so they will both have their private and public key. When a transaction is to be performed by a party, the transaction is encrypted by the private key and broadcast worldwide for it to be validated by the Minors. 

Minors verify the authenticity of the sender and receiver and whether the transaction can take place. They check and verify the user and confirm if the coin is real and not a fake one. If verified, the transaction will be added to a block that contains another transaction that is part of the blockchain. Once everything is done and verified, the transaction will show that bitcoin has been reduced from one wallet and added to the other.

Features of Blockchain

  1. Everyone has access to it.
  2. It is Decentralized: Blockchain is decentralized in the sense that, a single person does not govern or control it, a group of nodes maintains it. It provides a trustless environment and improves data reconciliation (a verification phase in data migration)
  3. It is Secured and cannot be corrupted.
  4. It cannot be changed or altered.
  5. It is consensus – Consensus decision-making is a group decision-making process in which group members develop, and agree to support a decision in the best interest of the whole.

Types of BlockChain 

  1. Public Blockchain
  2. Private Blockchain
  3. Consortium Blockchain
  1. Public Blockchain: This is a type of blockchain that does not require permission to access and is totally decentralized. Public blockchains are used in mining cryptocurrencies. Examples of public blockchains are Bitcoin, Ethereum, Litecoin.
  2. Private Blockchain: This is a type of blockchain that required permission and they are managed blockchains. They are not completely decentralized as they are controlled by an organization.
  3. Consortium Blockchain: They are blockchains that require permission and are governed or controlled by a group of organizations, instead of one entity, as in the case of the private blockchain. Consortium blockchains enjoy more decentralization than private blockchains, which improves security.

Quorum, Hyperledger, and Corda are all examples of Consortium blockchain. ConsenSys Quorum enables enterprises to leverage Ethereum for their high-value blockchain applications. Businesses can rely on the Quorum open-source protocol layer and integrate on top of its product modules from ConsenSys, other companies, or your in-house development team to build high-performance, customizable applications.

Hyperledger is an open-source collaborative effort that has been created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation. The goals of Hyperledger are; 

  • Create enterprise-grade, open-source, distributed ledger frameworks, and code bases to support business transactions.
  • Provide neutral, open, and community-driven infrastructure supported by technical and business governance.
  • Build technical communities to develop blockchain and shared ledger use cases, field trials, and deployments.
  • Educate the public about the market opportunity for blockchain technology
  • Promote our community of communities by taking a toolkit approach with many platforms and frameworks. 

Corda is an open-source blockchain project that has been specifically designed for enterprise use. It was created by R3. Corda is a next-gen blockchain platform that delivers privacy, scalability, and security, making it the DLT platform of choice for financial services and beyond.

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