In the past few years every one has been made acquainted with the term blockchain! What only few actually gets it! So, lets try to understand it from the basic. Say, there is a payment gateway for bank name ‘ABC Bank’. I am ‘A‘ developing an application, I uses ABC Bank’s payment gateway what it means is that Bank ABC provides me an API through which People using A’s application would be able to enter Credit Card number And Pin number, the api would validate the information and allow the user to make transaction. Bank would have all the details and would send a copy of the same to A’s application with a reference number which A would store in database and use another api to get restricted details of transaction through that reference number. Now, there is another person ‘B’ doing same for his own application and same procedure happens for B too.
Lets note some basic points here. A and B never have original data for transaction! All the data resides with Bank ABC. A cannot see B’s data ever!!! And B cannot see A’s data because they both have individual subset of ABC Bank’s Data!
Lets have a world were if from A’s application transactions are made or B’s application or even directly in bank ABC all have live addition of same piece of data every time what it means is that all are working on the same piece of data, all 3 have same data. Here’s when blockchain comes in picture.
What exactly is BlockChain?
According to the authors of “Blockchain Revolution,” Don & Alex Tapscott, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” where digital ledger means that there is no central administrator or centralized data storage pretty much like how google sheets work! Blockchain is a new and innovative way of documenting information on the internet which has become alive again after introduction with bitcoins. A blockchain is a chain of time-stamped blocks that contain an immutable record of data and is managed by a cluster of nodes not by any single authority.Lets get into the major components then the picture would be more clear!
Major Components of BlockChain:
- Blocks:A block can be considered as a page in the ledger. Each block in the blockchain comprises of data, timestamp, a hash of the block and a hash of the previous block.
- Private Key Cryptography:In Private key, the same key (secret key) is used for encryption and decryption.
- Distributed Network with a shared ledger(database):A node on the network starts a transaction by creating it and signing it with its private key. Transactions comprise of the logic of transfer of value, source and destination addresses, rules and validation information.The next step is that the transaction must be verified. A network of computers on the blockchain verifies the transactions to be stored in a block. Once they confirm that the transaction actually happened, they add it to the block.