Blockchain technology:
is a decentralized, digital ledger that records transactions across a network of computers. Here's a simplified explanation:
Key Components:
1. Blocks:
Groups of transactions (e.g., financial transactions, data exchanges).
2. Chain:
Linked blocks, forming a permanent and unalterable record.
3. Network:
Computers (nodes) verifying and updating the blockchain.
4. Cryptography:
Secure encryption methods protecting transactions.
How it Works:
1. A new transaction is made.
2. The transaction is verified by network nodes.
3. Verified transactions form a block.
4. The block is added to the blockchain.
5. Each node updates its copy of the blockchain.
6. The blockchain is permanently stored across the network.
Characteristics:
1. Decentralized: No single control point.
2. Immutable: Transactions cannot be altered.
3. Transparent: All transactions are publicly visible.
4. Secure: Cryptography protects transactions.
Uses:
1. Cryptocurrencies (e.g., Bitcoin, Ethereum)
2. Supply chain management
3. Smart contracts
4. Identity verification
5. Healthcare record management
6. Voting systems
Benefits:
1. Increased security
2. Improved transparency
3. Enhanced accountability
4. Reduced transaction costs
5. Faster settlement times
Simple Analogy:
Imagine a digital book (ledger) shared among friends. Each page (block) contains transactions (e.g., money exchanges). Once a page is filled, it's locked and linked to the previous page, creating an unalterable chain of transactions.
