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Blockchain Technology: What Is It?

by CryptoWordTalk

From a distance, a blockchain may seem to be no different from other decentralized digital systems, such as Wikipedia.

Many individuals may enter data into a blockchain, and a community of users can govern how that data is modified and updated. Wikipedia articles, likewise, are not the work of a single author. The information is not in the control of a single person.

However, when one descends to the ground level, the distinctions that distinguish blockchain technology become more apparent. Wikipedia is integrated into the World Wide Web (WWW) using a client-server network architecture, despite the fact that they both operate on dispersed networks (the internet).

A user (client) with the appropriate account rights may edit Wikipedia articles hosted on a centralized server.

When a person visits a Wikipedia page, they will see the most recent version of the Wikipedia entry’s “master copy.” The database is still under the control of Wikipedia administrators, enabling access and permissions to be managed by a single authority.

Source: Coindesk

Wikipedia’s digital backbone is comparable to today’s highly secure and centralized databases maintained by governments, banks, and insurance firms. The owners of centralized databases are in charge of managing changes and access, as well as safeguarding them from cyber-threats.

Blockchain technology’s distributed database has a fundamentally different backbone.While Wikipedia’s “master copy” is modified on a database and all clients see the upgraded version, in the scenario of a blockchain, each node in the network comes to the same outcome, updating the record independently, with the most famous record becoming the de facto official record without a master copy.

Transactions are broadcast on a blockchain, and each node creates its own updated record of events. (Maria Kuznetsova). Source: Coindesk

It is this distinction that makes blockchain technology so valuable: it is a breakthrough in information registration and distribution that removes the requirement for a trusted third party to enable digital interactions.

Despite its advantages, blockchain technology is not a new technology.

Rather, it is a hybrid of tried-and-true technologies that have been combined in a novel manner. Satoshi Nakamoto’s concept was made possible by the careful coordination of three technologies (private key cryptography, the internet and a protocol regulating incentivization).

As a result, there is no need for a trusted third party in digital interactions. The job of protecting digital connections is done for you by blockchain technology’s beautiful, simple, but strong network design.

Defining the Concept of Digital Trust

Trust is a risk assessment between two parties, and defining trust in the digital age frequently comes down to establishing identity (authentication) and demonstrating permissions (authorization).Simply stated, we want to verify that you are who you say you are. “Should you be able to do what you’re attempting to do?” and “Should you be able to accomplish what you’re trying to do?”

Private-key cryptography provides a powerful ownership tool that satisfies authentication requirements in the case of blockchain technology. Ownership is defined as having a private key in your possession. It also prevents a person from disclosing more personal information than is required to authenticate their identity for a transaction, leaving them vulnerable to hackers.

Authentication is insufficient. As a starting point for authorization – having enough money, broadcasting the proper transaction type, and so on – a dispersed, peer-to-peer network is required. The danger of centralized corruption or failure is reduced with a dispersed network. The transaction network’s record-keeping and security must likewise be committed to this dispersed network. The whole network following the rules on which it was built (the blockchain’s protocol) results in transactions being authorized. This kind of authentication and authorisation allows for digital interactions without depending on (expensive) trust.

The concept may be used for any requirement for a reliable record-keeping system.

Blockchain technology is often referred to as the basis of the Internet of Value, since it serves as the backbone for a transaction layer for the internet. Entrepreneurs in a variety of sectors have become aware of the ramifications of blockchain technology’s growth, as well as the new and strong digital connections it allows. The notion that cryptographic keys and shared ledgers may encourage users to protect and formalize digital connections has sparked new and creative methods for governments, IT firms, banks, and others to create this internet transaction layer.

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