What Is Blockchain? A Complete Guide 2022-23

With the rise in popularity of Bitcoins and cryptocurrency, the term “Blockchain” has gained a lot of traction. But many of the people that want to come into the field of cryptocurrencies get confused and ask the question ”What is blockchain?”.

Don’t worry because we have got you covered. In this article, we are going to explain what a blockchain is? Also, we are going to answer a series of questions related to blockchain technology.

Furthermore, we are going to explain each term in a way that the most basic reader with simple IT-related knowledge can easily understand. So, take a seat, get easy, relax, and read this article.

Table of Content

• What is Blockchain?
• How does blockchain work?
• Why is Blockchain getting popular?
• Types of Blockchain
• Advantages of Blockchain
• Conclusion

What is blockchain?

The first and foremost important question that a layman wants to understand is what is blockchain? Let’s first start by answering this question. 

Blockchain is just like a ledger. It is a digital ledger to store the data. But this is no ordinary data, this data includes cryptocurrencies, NFTs, and smart contracts.

This data is visible to anyone that wants to see it, but it is unchangeable, unhackable, and secure. Moreover, blockchain works on the principle of decentralization. Rather than being on a simple server, a multitude of computers holds this data. This data is publicly visible to anyone.

Do you know blockchain will be the backbone of Web 3.0? Read our article on Web 3.0 the future of the internet to know why.

What is blockchain technology?

Another thing that confuses the people is blockchain and blockchain technology. Yes, blockchain and blockchain technology are both the same terms. So don’t get confused by the questions of what is blockchain and what is blockchain technology. Both point toward the same thing.

How does blockchain work?

Now that we have a basic understanding of blockchain it’s time to learn about its working. To easily digest how blockchain works we have divided it into three parts:

Blocks

The first part is the block. These blocks hold the data. There are numerous blocks that make a chain of blocks, hence the name blockchain. After the addition of data to a block, the block is closed.

Miners

The second part of blockchain working work is the miners. These miners are responsible for adding new blocks. Mining a new block is an extremely difficult task. Special sophisticated software performs this tough task. Once the miner is able to mine the new block. The miner receives a financial reward by adding a new block.

Nodes 

The core of blockchain technology is its decentralization. This gets possible with the help of the nodes. These nodes are electronic devices connected to the chain of blocks. Each block has its own special nodes. The nodes verify the authenticity of data.

By understanding these 3 parts, now you can easily understand the working of blockchain. There are blocks that miners add using complex software after a long procedure. You can add data into the block. The data that is being added is checked, cross-verified, and authenticated by nodes. Once they give the permission data gets added to the block. The nodes then close the block.

Why is blockchain getting popular?

In recent times, blockchain is getting more popular day by day. Following are some of the reasons:

1. The reason behind its popularity is that: no other technology provides the security the way blockchain is providing security of data. 
2. Also, it has removed the middle man. It’s a simple peer-to-peer transaction model that requires no other person to carry out your transactions.
3. Besides providing centralization it is also providing automation. That means after the verification of data it will automatically upload. Moreover, transactions and other systems are also automatically done, after the fulfillment of certain criteria

All of these factors are contributing to its tremendous popularity.

Types of blockchain

There are different types of blockchain technology. With all of this knowledge let’s discuss some types of blockchain:

Public Blockchain

A public blockchain is the one in which the data is publicly maintained. Anyone can view this data. No single authority is in control of the data. Also, no one can alter this data. Anyone can add the data in a block or add a block altogether.

Private Blockchain

Till this, we were telling you that no organization or a specific group can control the blockchain. It is an open-source peer-to-peer transactional model with no single authority. However, here comes into play a unique concept. A blockchain that is controllable by a single organization. 

However, a private blockchain is one in which the organization can control who can add data and blocks. Who can view the data is also in control of the organization. The organization can even alter the data. Organizations use this for increased security.

Permissioned Blockchain

This is another variation on private, however, it is a hybrid between public and private. As clear by the name, permissioned blockchain works on the system of permission. Any specific user takes the permission to view, edit and add blocks. It is getting popular in different organizations as it incorporates the two technologies.

Advantages of blockchain

Blockchain provides a ton of advantages. Let’s discuss some of these advantages. These advantages will also give us the answer to a great question “ Why blockchain is important?”:

1. Accurate transactions

As we have discussed above, the data is cross-checked and cross-verified by multiple methods. So there is no chance of a mistake. In fact, blockchain is so accurate that some people are saying it’s 100% accurate. That’s why it provides completely accurate transactions.

2. High security

The data is cross-verified and authenticated by multiple nodes. After adding the data the block is closed. No one can neither alter nor can hack this data once it is added. These steps make it almost completely free of adding fraud data or hacking the data. Moreover, the chances for fraud transactions are almost zero. Blockchain is highly secure.

3. Removal of the third party

two people can perform a transaction between them anywhere at any time. There is no need for a bank or a third party. Additionally, this increases the speed as well as the cost.

4. High speed

Due to its centralization and removal of third-party, blockchain become highly speedy and efficient. There is no need to wait for hours and days so that the bank can process your transaction requests. Transactions happen almost instantly.

5. Data transparency

Blockchain has high data transparency along with data traceability. It creates an audit trail of every step. This trail can be traced so if there is any weakness that can be overcome later. Because data is visible to multiple people at the same time it is also highly transparent.

6. Automation

Last but not least blockchain also provides automation. This increases the speed even further. After the fulfillment of certain criteria, the next process or a transaction will automate i.e automatically happen.

What is blockchain used for?

Blockchain is usable for anything or to store any type of data. However popularly blockchain is mostly famous for the usage of cryptocurrencies like bitcoin, Ethereum, etc, NFTs, smart contracts, and voting.

Blockchain platforms

A number of technology-related industries are using blockchain technology now. There are a lot of blockchain platforms. Following are some of the most famous ones:

1. IBM
2. Tron
3. Corda
4. Multichain
5. Ethereum
6. EOS
7. Open-chain

Conclusion

Here you go. In this article, we have explained what a blockchain is, how it works, and its advantages. Blockchain is a highly securable, unhackable way to maintain and store data that is viewable to anyone. It provides faster transactions and reduces costs and transparency and traceability of data. There are two ways to use blockchain: one is public and the other is private. However, organizations are using private blockchains to store and maintain their data.