How Does BlockChain Work? Blockchain Simplified 2
Blockchain envisages recording and distributing digital data but not edited. This is the soul of immutable ledgers or details of transactions which cannot be edited, altered, or destroyed. Hence Blockchain is also labeled as distributed ledger technology (DLT). The concept was born long back in 1991 but gained fame in 2009 with the launch of Bitcoin the first crypto currency. Today the ambit of Blockchain has considerably widened to include decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts.
BlockChain Transaction Process
BlockChain enables its data in its database to be spread out among different nodes thus creating both redundancy as well as fidelity of the data it is storing. Therefore if any unwanted entry is attempted, Blockchain will prevent it to happen. If in any instance a bad actor tries to attempt to alter the data at one instance the other nodes will be alerted and will not permit the actor to do the alteration.
If a user tries to alter details of a Bitcoin record of transaction, all the other nodes will immediately cross refer one another and zero in to the node with the improper or incorrect information. Thus transparency and security of a high degree is effected making it almost impossible to alter or hack.
Since the information entered and the history is almost indestructible, a record can be created, be it be a list of transactions of a cryptocurrency or other information like legal contracts, state identifications, or a company’s product inventory.
If fresh input has to be entered into a Blockchain platform, a majority of the nodes of the decentralized network’s computing power would need to agree to it. To prevent unscrupulous element from effecting a bad transaction or double spends, Blockchain has a validation process also known as as proof of work (PoW) or proof of stake (PoS). These mechanisms allow for agreement even when no single node is in charge.
The decentralized nature of crypto currency Blockchain makes all transactions transparent and viewable by everyone. By having a personal node or employing the blockchain explorers that allow anyone to see transactions occurring live. Every node has its own copy of the Blockchain which is continuously updated as fresh data is validated and added.
So if anyone hacks an exchange and steals Bitcoin, he may be anonymous but the Bitcoin plundered cannot be used and if it is moved or spent, it will be traced.