What is Blockchain Technology ?
Ans-Blockchain technology is a decentralized and distributed digital ledger that records transactions across multiple computers in a way that ensures security, transparency, and immutability. It operates on the principles of cryptography and consensus mechanisms to create a trustworthy system without the need for a central authority.
Key Features of Blockchain:
Decentralization:
- The ledger is not stored on a central server but is distributed across a network of nodes (computers). Each node has a copy of the entire blockchain.
Immutability:
- Once a transaction is recorded and added to the blockchain, it cannot be altered or deleted. This is achieved using cryptographic hashes.
Transparency:
- All transactions are visible to participants in the network. While the data is transparent, the identities of participants can remain anonymous through cryptographic addresses.
Security:
- Transactions are secured using cryptographic techniques, making it nearly impossible to alter or hack the data without consensus from the majority of the network.
Consensus Mechanisms:
- To validate transactions, blockchain networks use consensus algorithms such as Proof of Work (PoW), Proof of Stake (PoS), or others. These mechanisms ensure agreement among nodes about the state of the ledger.
Smart Contracts (optional in some blockchains):
- Blockchain platforms like Ethereum allow for the creation of self-executing contracts where the terms are directly written into code. These contracts automatically execute when conditions are met.
How Blockchain Works:
Transaction Initiation: A user initiates a transaction, which is broadcasted to the network.
Validation: Nodes validate the transaction using the consensus mechanism.
Block Creation: Validated transactions are grouped into a block.
Linking: Each block is linked to the previous one using a cryptographic hash, forming a chain.
Distribution: The new block is added to the blockchain and distributed across all nodes in the network.
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