For those who are new to cryptocurrency concept, must understand the concept of blockchain, which is an essential part of cryptocurrency. So here we bring you a blockchain guide for all beginners, which will be much useful for them to know everything about crypto technology. Although there are blockchain courses for beginners, by reading a blog on it, you will be getting a brief update about the theory of blockchain. So let’s explore it.
What Do You Understand by Blockchain?
Blockchain, as the name suggests, is a chain of blocks which is installed with information. The technology records all the digital documents, which make it impossible for getting them backdated and tempered. Besides this, it also provides the security of valuable assets like property, contracts or money without any interference of the third party like government or banks. Also, one must keep in mind that there cannot be further changes, once the data gets recorded in the blockchain.
Since blockchain is a technology, it works on software protocol and needs internet access to run. It is also known as meta technology, as other technologies get affected by it. It consists of many features including software application, database and connected computers etc.
Know The Difference Between Bitcoin And Blockchain
Most of the people get misunderstood between bitcoin and blockchain and consider them as somewhat the same or interlinked with each other. But that is not true, as there is a difference between the two. Though both are indeed linked with each other, you cannot consider them to be the same. It is because blockchain is not bitcoin, but rather a technology behind it. So one needs to understand these differences while knowing the theory of blockchain.
Another feature which states the difference between the two is that bitcoin is the cryptocurrency, whereas, blockchain is the digital ledger that keeps track of those who owns the cryptocurrency. Though bitcoin and blockchain are interlinked with each other, still, there is a difference, which states that you cannot expect bitcoin without blockchain, but can expect blockchain without bitcoin.
Working Of Blockchain Transaction
To understand the theory of blockchain in terms of its working, you need to understand about its four steps.
Step 1: When a person request for the transaction which involves records, information, cryptocurrency and contracts
Step 2: The transaction which is requested gets broadcasted to the P2P network through nodes.
Step 3: The network of nodes then checks the accuracy of transaction and user’s status through algorithms.
Step 4: After completion of the transaction, the existing blockchain is added with the new block in such a manner that it becomes permanent and can’t be altered.
Need For Blockchain
While knowing the theory of blockchain, it is necessary for you to understand about the need for blockchain, which makes it a popular technology. So better know these 4 factors behind it.
- Reliable: Blockchain helps in certifying and verifying the identification of interested parties. This leads to speeding up transactions, removing binary records and reducing rates.
- Recovery capacity: Blockchain has an advantage for recovery capacity. Nodes well operate the technology in times of unexpected fault caused to the system.
- Time-saving: In the corporate world, blockchain plays a significant role in the settlement of trades in a short period, since it does not include the lengthy process of verification and clearance.
- Co-operation: Another valid reason which states the need for blockchain is that it enables parties for transaction activity with each other and having no interference of mediating party.
Understanding the theory of blockchain is a must to know if you are new to the cryptocurrency world. Today we have provided you with such a useful guide regarding blockchain, and have tried to clear the confusion which you have between blockchain and bitcoin. Now you must have known the fundamental difference between the technology (blockchain) and the digital token (bitcoin). Besides this, we also provided information about its working through four different steps. Apart from it, we also updated you about the need for blockchain, which makes it a popular technology in the crypto world. You can choose to watch breaking crypto videos, to get updates about blockchain and cryptocurrencies.