Blockchain technology is erupting out on an international scale at a very rapid pace. More and more people are getting enlightened by the prospects that it offers as products based on this technology are coming out in the market in large numbers. But for a person who does not know about this technology, and even if one is hearing about it for the first time, why is it called “Blockchain”? Is there a series of data or is there a chain of blocks…wait! That’s actually that’s pretty much it, kind of.
Blockchain technology is essentially designed to incorporate decentralization in various frameworks. The idea behind this technology is to devise a framework which is trustless. Trustless does not mean that the users do not trust this technology, it’s quite the opposite. Trustless means that the code and mathematics of the network are so good that the users do not need to trust any party at all. Trust is handled by the technology. For example, banks. In the current monetary framework, people using the network of a bank trust the bank. Blockchain essentially eliminates this need of such an intermediate party. But still…why is “Blockchain” named so?
As the third party is eliminated from the scene, which was previously maintaining all the records, there arises a need of keeping the data somewhere now. Blockchain solves this issue by presenting forward the concept of a block. A block is simply a structure that keeps some information. A sent B 10 coins at this specific time. This is the kind of information that is maintained by the blocks in a blockchain.
Now once a block is formed in a blockchain network holding some information relating to the network, it becomes immutable, meaning it cannot be changed now. A specific piece of information has been added to the network which updates the network according to the proceedings. Now, let’s say a new happening occurred in the network. B sent A 5 coins back. How will we keep it?
We cannot add it in the previous block as it has now become immutable. Here comes in the need for generating a new block. After some time, when a new block is formed, this information can be added to it. The data is kept in a series of blocks. More specifically…a chain of blocks, hence the name, “Blockchain”.
As the previous data is immutable and is usually visible to all the participants of the network, a fabric of transparency is established.
Blockchain thus removes the need of a central party through its architecture. An immutable, decentralized and a trustless system is established. If this technology is used properly, it can revamp various industrial frameworks across the world. It can also restructure electoral and governmental processes. As more and more developments are made in this arena, it remains to be seen how many more industries does it affect besides finance moving into the future.