Features of Blockchain
- (Stanford University - Alvin Wei-Cheng Wong)
- Overview
A blockchain is a secure database shared among a network of participants, all of whom have simultaneous access to up-to-date information. Blockchain is a technology that enables secure sharing of information. Obviously, the data is stored in a database. Transactions are recorded in books of accounts called ledgers.
A blockchain is a distributed database or ledger (one of today's top technology trends), which means that the power to update the blockchain is distributed among nodes or participants in a public or private computer network. This is known as distributed ledger technology (DLT). Nodes are incentivized by digital tokens or currencies to update the blockchain.
Blockchain allows for permanent, immutable and transparent recording of data and transactions. In turn, this makes it possible to exchange anything of value, whether tangible or intangible.
Let's take a look at the main features of blockchain technology.
- Immutable
Immutability means that the blockchain is a permanent and unchangeable network. Blockchain technology functions through a collection of nodes. Once a transaction is recorded on the blockchain, it cannot be modified or deleted. This makes the blockchain an immutable and tamper-proof ledger, offering a high degree of security and trust.
- Every node in the network has a copy of the digital ledger. In order to add a transaction, each node checks the validity of the transaction, and if the majority of nodes think it is a valid transaction, it is added to the network. This means that no block of transactions can be added to the ledger by anyone without the approval of a majority of nodes.
- Any verified records are irreversible and cannot be changed. This means it cannot be edited, changed or deleted by any user on the network.
- Distributed
All network participants have a copy of the ledger for complete transparency. The public ledger will provide complete information about all participants and transactions on the network. Distributed computing power between computers ensures better results.
Distributed ledgers are one of the important features of blockchain for the following reasons:
- In a distributed ledger, it's easy to keep track of what's happening in the ledger because changes propagate very quickly across the ledger.
- Every node on the blockchain network must maintain ledgers and participate in verification.
- Any changes in the ledger will be updated within seconds or minutes, and since there are no intermediaries involved in the blockchain, the verification of the changes will be done quickly.
- If a user wants to add a new block, then other participating nodes must verify the transaction. For a new block to be added to a blockchain network, it must be approved by a majority of nodes on the network.
- In a blockchain network, no node receives any special treatment or benefits from the network. Everyone has to follow standard procedures to add new blocks to the network.
- Decentralized
Blockchain technology is a decentralized system, which means that there is no central authority controlling the network. Instead, the network consists of a large number of nodes that work together to verify and confirm transactions. Every node in the blockchain network will have the same copy of the ledger.
The decentralized nature offers many advantages in blockchain networks:
- Since a blockchain network does not depend on human computation, it is fully organized and fault-tolerant.
- Blockchain networks are less prone to failure due to the decentralized nature of the network. It is more expensive for hackers to attack a system, so failure is less likely.
- There are no third parties involved, so the system does not add risk.
- The decentralized nature of blockchain helps create a transparent profile for every participant on the network. This way, every change is traceable and more specific.
- Users are now in control of their property without having to rely on third parties to maintain and manage their assets.
- Security
All records in the blockchain are individually encrypted. Using encryption adds another layer of security to the entire process on the blockchain network. Since there is no central authority, it does not mean that data can simply be added, updated or deleted on the network.
Every piece of information on the blockchain is cryptographically hashed, which means every piece of data has a unique identity on the network. All blocks contain their own unique hash and the hash of the previous block. Due to this property, these blocks are cryptographically linked to each other. Any attempt to modify data would mean changing all hash IDs, which is completely impossible.
- Consensus
Every blockchain has consensus to help the network make fast and fair decisions. Consensus is a decision-making algorithm that enables groups of active nodes on the network to reach consensus faster and faster to ensure the smooth operation of the system. Nodes may not trust each other, but they can trust the algorithms running at the core of the network to make decisions. There are many consensus algorithms available, each with its advantages and disadvantages. Every blockchain must have a consensus algorithm, otherwise it loses value.
- Unanimous
All network participants agree to the validity of a record before it can be added to the network. When a node wants to add a block to the network, it must get a majority vote, otherwise the block cannot be added to the network. Nodes cannot simply add, update or delete information from the network. Every record is updated at the same time, and updates propagate quickly across the network. Therefore, it is impossible to make any changes without the consent of the majority of nodes in the network.
- Faster Settlement
Traditional banking systems are vulnerable to disruption for a number of reasons, such as the days it takes to process transactions after all settlements have been completed. On the other hand, blockchain offers faster settlements compared to traditional banking systems. This blockchain functionality helps to make life easier.
Blockchain technology is growing and improving day by day and has a very bright future in the coming years. The properties of transparency, trust, and tamper resistance have led to its many applications, such as Bitcoin, Ethereum, etc. It is the backbone of making business and government processes more secure, efficient and effective.
[More to come ...]
