Review of Blockchain Technology.

Review of Blockchain Technology.

Blockchain is simply a list of records that store its data publicly in chronological order. Information on the blockchain is not controlled by a centralized system.

Blockchain consists of blocks that are created and added to previous blocks, the blocks consist of a list of transactions, new blocks cannot be created and added to the blockchain randomly, there has to be a reference to the past blocks on the particular blockchain, these blocks are linked together using cryptographic techniques forming a chain of blocks, hence the name “blockchain”.

BLOCKCHAIN AS A DISTRIBUTED LEDGER

Ledger simply put is something that holds record. Blockchain technology is a structure that stores transactional records of the public in several databases in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a 'digital ledger'.

A distributed ledger is a type of database that exists among multiple nodes or locations, all the nodes in the network hold the same record in which if there is a slight change in one node there is an automatically synchronized change in every other node on the network, the data within the ledger is synchronized and updated through a consensus protocol. Distributed Ledger technology is used in blockchain, there are other applications like data management and Internet of Things (IoT). Blockchain is best the known Distributed Ledger technology.

CONSENSUS MECHANISM

This is the agreement on which block gets added to the blockchain, this is particularly useful to guarantee data consistency across all nodes, this ensures that any new block added to the blockchain is the only version that is agreed upon and accepted on the blockchain. Examples of consensus mechanisms are Proof of Work,( as used in Bitcoin blockchain), proof of Stake(as used in Ethereum), Proof of Authority (as used in VeChain), and Practical Byzantine Fault Tolerance(as used in Hyperledger).

TYPES OF BLOCKCHAINS

Public Blockchain: these are blockchains that do not need special access to view or transact, it is open to the public and anyone can participate in the consensus process. Only valid transactions that are sent to the blockchain will be added to the block. These blockchains are considered to be fully decentralized.

Consortium blockchain: A consortium blockchain is a blockchain where a pre-selected set of nodes controls the consensus process. The update and validation of the transactions may be available for the public to read, but it could also be restricted.

Fully Private Blockchain: in this type of blockchain there may be public or restricted access to read, but the participation and operation are restricted and are limited to specific authorized entities or participants.