A Blockchain is a decentralized, public and digital ledger that consists of a chain of blocks.
Many people lack awareness of how cryptocurrency works. This lack of knowledge creates various rumours and makes many retailers shy away from cryptocurrency.
The first-ever cryptocurrency was created back in 2009 named Bitcoin, which is also the most valuable cryptocurrency today.
The biggest question when it comes to investing in digital currency is if it is safe or not. Blockchain technology comes into the picture here, making investing in cryptocurrency safer than one would think.
What is blockchain technology?
Blockchain acts as a platform for digital transactions of cryptocurrencies like Bitcoin, Ethereum and others. It operates as a database for all crypto transactions around the world.
As the name suggests, this technology acts as a chain of blocks in which transactions are recorded.
It works like a digital ledger that is open to the public, meaning anyone can see the transaction made. These transactions are recorded and saved in the blocks with a time stamp.
Is blockchain safe?
Blockchain is a chain of blocks that consists of transaction data. Each block in the chain has a unique hash number and a link connecting to the previous block.
Each block has its importance in the chain, and it cannot be changed. If it is changed, the hash number of the block will alter, and the block will be invalid.
There are other aspects like cryptography, consensus and decentralization.
All the blocks in the chain are protected by cryptography. It uses codes to preserve and communicate information.
Every user has a unique or private key and a public key that can be verified by the individual’s public key with whom the transaction is to be made.
If there is any change in the block’s data, the private key becomes invalid, and the block is discarded from the chain.
The cryptocurrency economy is decentralized, meaning it does not have a single, higher authority that regulates the market.
In a private blockchain, there is a single point of control where decentralization does not exist.
However, in a public blockchain, any user or entity can carry out their transactions with authority because of decentralization.
All the data is controlled and managed by the owner. Because there is no central entity, hacking into one system will not affect other parts.
Most consensus models run on protocols requiring proof of work, authority, proof of stake, etc.
A blockchain operates through a consensus model, verifying transactions and legitimizing them, as there is no central agency.
Cryptocurrency is a decentralized economy. The network has thousands of nodes worldwide to keep track of transactions happening on the system.
If something goes wrong in the server, other people will look into it and fix it.
The system makes it irreversible to modify the data of the block. This restricts users from making any changes.
In bitcoin, all the transactions are transparent and public, which makes anyone look into it, making it difficult for hackers to hack into the servers.