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What is Blockchain Technology?

Blockchain technology has been a popular topic in recent years because of its simplicity and transparency. Many people are taking interest in cryptocurrency that is backed by blockchain technology. What is this blockchain technology? Let's find out.

By harshit vermaPublished 2 years ago 4 min read
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Blockchain technology has been a popular topic in recent years because of its simplicity and transparency. Many people are taking interest in cryptocurrency that is backed by blockchain technology. What is this blockchain technology? Let's find out.

Blockchain Technology: What Does it Mean?

Blockchain is a digitally distributed ledger that records all transactions across a peer-to-peer network. The recorded transactions are stored in multiple databases known as "chains" in a network connected through peer-to-peer Nodes. Participants can verify their transactions using this technology without the need for a central clearing agency. Because it is a shared, unchangeable ledger, everyone can see the information.

As crypto transactions are highly secure, the digital signature of its owner authorises every transaction and this digital signature authenticates the transaction and protects it from being altered. It records transactions based on actual purchases. It is fascinating to see that anyone can access the data but not corrupt it.

How Does Blockchain Technology Work?

Blockchain uses a combination of three leading technologies:

1. Cryptographic keys

2. Peer-to-peer network containing a shared ledger

3. Means of computing to store the transactions and records of the network.

Two keys are required to create cryptography keys: a private key and a public key that is used to perform successful transactions between two people. This is the essential aspect of blockchain technology. This identity is also known as a 'digital signature' in cryptocurrency that is responsible for authorising and controlling transactions.

The digital signature is then combined with the peer-to-peer network. A large number of authorities use this signature to reach a consensus on transactions, among other issues. They authorise a deal, and it is then certified by mathematical verification. It results in a secure transaction between the two parties. All in all, blockchain users use cryptography keys to perform various types of digital interactions on the peer-to-peer network.

Why is Blockchain Technology Becoming Popular?

Let's say you want to transfer money from your bank account to your family and friends. You have to log in to online banking to share the money with the recipient using the account number. Your bank will update the transaction records once the transaction is complete. This seems straightforward enough but is something that most people overlook. These transactions are easy to alter, which is why third-party payment apps have evolved in recent years.

This vulnerability is the reason blockchain technology was invented. Blockchain technology is becoming more popular in many industries, including retail and supply chain management. If you have been considering investing in cryptocurrency backed by blockchain technology, there could not be a better time.

Blockchain is becoming popular among the masses because using blockchain backed currency has many advantages. Let's see what are these advantages.

Advantages of Blockchain Technology

1. Highly Secure

Blockchain technology employs a digital signature feature to conduct fraud-free transactions. This makes it impossible for other users to alter or corrupt the data of individuals without a specific digital signature.

2. Decentralised System

Transactions require approval from regulatory authorities such as banks or the government. However, transactions using Blockchain can be made with the mutual consent of users, which results in safer and smoother transfer transactions.

3. High Availability

Blockchain, unlike centralised systems, is decentralised and highly available because of its decentralised nature. Because everyone is connected to the blockchain network and all have a computer, even if one peer can go down, other peers will still be able to work.

4. Transparency

Blockchain, which is a decentralised system, offers transparency. Centralised systems do not allow for transparency. Organizations and enterprises can use blockchain technology to create a decentralised network free from any central authority.

5. Capabilities for Automation

Blockchain technology is programmable. It can automatically generate events, payments, and systematic actions when specific criteria are met.

6. Data Immutability

You have to trust the system administrator in a traditional database that won't change your data. Blockchain does not allow for any data to be altered or modified. The data stored in the Blockchain is irrevocable and cannot be undone.

7. Low Costs

With a traditional finance system, you have to pay third parties like banks to process the transactions. Still, with blockchain technology, these intermediary fees are eliminated, and prices are reduced.

8. Universal Banking

Because anyone can access the blockchain to store money, it is a great way to bank the unbanked and protect against theft that can happen due to holding cash in physical locations.

Takeaway

Blockchain has revolutionized many industries and is going to continue to revolutionize many industries in the coming years. The global blockchain market is expected to grow from $3 Billion in 2020 to $39.7 Billion by 2025. Whether it is going to grow at this rate or at a faster pace, we have to wait and watch.

If you are looking for a way to pay when making any online transaction, and cryptocurrency is one of your payment choices, it’s well worth opening an account with a crypto payment gateway website. It will make the process much easier if you want to add that option to your transactions. Book your demo today on Kryptova.

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