A Blockchain is a decentralized, immutable ledger that is distributed among equally privileged nodes of a computer network.
What is a Blockchain?
Blockchain is a distributed and publically shared blockchain as database that facilitates the process of transactions that cannot be altered retroactively without the alteration of all subsequent blocks connected to it via a network. A blockchain accumulates information in a digital format making all transactions secure and decentralized.
HOW DOES BLOCKCHAIN TECHNOLOGY WORK?
COMBINATION OF THREE LEADING TECHNOLOGIES
1. Cryptographic Keys
2. P2P Networking
3. Computing
The Cryptography keys; Private Key and Public Key facilitates the process of performing transactions between two parties. Each individual holds two keys to form a unique identity reference. This secured identity reference is the most important aspect of blockchain technology. In the new technology era of Cryptocurrency, this identity is referred to as a “Digital Signature” which is used to authorize transactions.
Blockchain accumulates cryptography keys to perform various digital interactions over P2P networks. The Digital Signature is incorporated in Peer to Peer networking, where individuals who act as authorities use these digital signatures to reach a consensus. When a deal gets authorized, it is certified by verification which facilitates a successful and secure transaction between the two connected parties.
FEATURES OF A BLOCKCHAIN
- · Immutability
- · Decentralized System
- · Increased Capacity
- · Fidelity and Security
- · Automation Capability
TYPES OF BLOCKCHAIN
1. Private Blockchain Networks
A Private Blockchain Network is not decentralized, it operates on closed networks. It is a suitable blockchain network for small-scale businesses and organizations. These are permissioned blockchains under the control of a single entity such as an organization. It operates as a closed blockchain as database secured by cryptography and the organization’s defined needs.
Characteristics of Private Blockchain Network
- Distributed Ledger
- Mining Rights are Reserved
- Secured with Cryptography
- Prioritizes immutability
2. Public Blockchain Networks
A Public Blockchain is decentralized, which operates on the incentivizing motive. It is a publically accessible blockchain that encourages third parties to engage in order to keep the network agile. It operates on the Distributed Ledger Technology (DLT), offering more secured peer-to-peer networking. It incorporates the consensus algorithm for verifying the authenticity of the provided data.
Characteristics of Public Blockchain Network
- Decentralized Ledger
- Secured Networking
- Public Blockchain
- Works on Consensus Algorithm
3. Permissioned Blockchain Networks
A Permissioned Blockchain allows special access to the defined authorized users. It is a distributed ledger that is not publically accessible. The users have the power to perform certain actions which are approved by the ledger administrators. It brings about a better structure when assigning who can participate in the network and in what conditions.
Characteristics of Permissioned Blockchain Network
- Lack of Anonymity
- Private Group authorizes decisions
- Not Publically Accessible
- Maintains Transparency
4. Consortium Blockchain
Consortium Blockchain is a multi-dimension blockchain that incorporates both public and private components. It operates on a semi-decentralized network, where members are not associated with a single entity. Multiple organizations maintain a single consortium blockchain, making it more scalable and secure in nature. It also facilitates the degree of control and faster processing, making it more efficient and reliable.
Characteristics of Consortium Blockchain
- Partially Decentralized
- Degree of Control
- Maintains Confidentiality
- Faster Transactional Speed
KEY TAKEAWAYS
- Blockchain is a type of distributed blockchain as database that differs from a typical database in the way that data is structured and linked together via Cryptography.
- Cryptography uses Private and Public keys to access data and makes your transactions easy and secure through the encryption of data.
- Blockchains increase your data’s fidelity and security, transparency, and traceability of data across various networks.
- The four types of Blockchains include Private Blockchain Networks, Public Blockchain Networks, Permissioned Blockchain Networks, and Consortium Blockchains.