Before you make an investment ion cryptocurrency, you need to know the blockchain technology because all digital currencies including Bitcoin are based on this technology. From less interested investors to recognization by great entrepreneurs, cryptocurrency has gained a lot in recent years. This investment area is risky but, it can provide good profits to an investor. But it is a known fact that every investor is not well-versed with the functionality of the crypto market. This article has talked about the most important technology in the crypto world, i.e., Blockchain.
What is Blockchain?
Blockchain is a system that stores a database that can be distributed through the nodes of a computer network. This database is stored in a digital form. This database can be accessed by multiple people in the same network. If we talk about the difference between a typical database and Blockchain, it can be done based on how the data is structured.
The structure of both databases is different. In the case of Blockchain, the information is collected in the form of blocks. These blocks have a specified amount of storage, and when new data is filled, it gets attached to the new block. This is how a blockchain is made. You probably hard about the Bitcoin miners, who can solve complex mathematical problems to add such blocks, and they can keep your transactions secured.
While in the typical database, the data is structured into tables. Apart from this, the digital assets are distributed rather than transferred. All the digital assets here are decentralized and, it allows full transparency to the public. All transactions made on cryptocurrencies are stored in a public ledger.
This blockchain technology is a part of the crypto market, and the whole working of the crypto market is done on this technology. Now to understand the working of blockchain technology, here are the details.
Working of Blockchain Technology in Crypto Market
In the crypto market, blockchain technology is used in its original way. However, there are three components in the working of blockchain technology, which include blocks, miners, and nodes. Miners first add the blocks in the blockchain network through a specified process and they need to solve some methodical problems to add such blocks.
Every investor can add the information at the end of the network. This information can be accessed by members present in the network. Apart from this, nodes available in these blocks prevent any investor to own this technology. All users have equal rights on this network. Bitcoin and other cryptocurrencies are known as the digital currency, which cannot be controlled or owned by any government or institution.
Is Blockchain Technology Secure?
In blockchain technology, all the data is decentralized and is stored chronologically. When an investor enters the data at the end of the Blockchain, it becomes difficult to go back or rectify it. The contents of these blocks can be rectified only when the majority of the networks allow the same.
It is difficult to rectify these contents because every piece of digital information is converted into a string of numbers with a hash code. Hash codes are mathematical functions that respond to the transformation of digital data into a string of integers.
This makes this system secure as hacking is not easily possible in this system. In a crypto world, it is important to keep the data safe, and the usage of blockchain technology in it makes it safe. Let’s understand that why hacking is not possible.
Suppose a hacker who is a part of the blockchain network wants to hack the system and wants to acquire your cryptocurrency. Altering its copy can make it illegitimate. To proceed with the hacking offense, a hacker needs to alter the 51% copies of the blockchain network.
But altering such a large number of blocks requires more money and time. It is so because new hash codes will be assigned, and there is a need to redo all the blocks. So hacking of such blockchains is not possible.
Today, many investors are heading towards the cryptocurrency market. But, understanding the working of the cryptocurrency can be difficult if not explained thoroughly. With this article, we have explained the major portion of the working of cryptocurrency and blockchain technology. However, with applications like the preview, an investor can simplify these trading processes and invest their money in Bitcoin.