If we think about the current trends, people are fast becoming technology freaks. Where any and every aspect of life has somewhat related itself to the social media. From relationship status to exchange of photographs everything takes place over the internet between two people sitting miles apart from each other. The two people doing this exchange of images or texts or information in general work on mutual trust. There is no third party involved to make this exchange happen. However, when it comes to money, we require the help of a third centralised party to make the transaction. Why? The answer is lack of trust. To make trusting each other easier, BlockChain comes to the rescue.
Invented by Satoshi Nakamoto in 2008, BlockChain is a technology that can replace the existence of banks in the world today. BlockChain is a digital cryptographic ledger that is decentralised and public. The BlockChain technology was primarily invented to bring bitcoin to the market.
3. Instead of a central party, bank in case of money, the blockchain technology works with authorizing each and every one of the users on its network. Every user on the network can make a transaction on their own.
transaction made, will be recorded in all the ledgers on the network. In this
manner, the database of blockchain is not kept in one central location, but is
distributed over the network.
How it works:
1. A initiates transaction of some goods to be transferred to B.
2. A requests the network to execute the transaction. The request is floated in the form of an unauthorized block.
3. This request is received by every user on the network. If all the users identify this transaction as unique, the block is then authorized and linked to the long chain of authorized transactions that have ever taken place on the network.
4. Based on this addition of an authorized block, every user on the network updates their ledger accordingly.
5. Hence, the goods listed in the belongings of A have now been transferred under the belongings of B without the interference of a third party.
The reason why BlockChain is such a groundbreaking idea is not only because of the exclusion of a third party. There are immense benefits of being on the BlockChain network. The trust factor built among the users by the developers of this technology is because of the complex mathematics that comes along with it.
Every user on the network is identified not by his name, but by a public key that is similar to an account number. The blockchain technology authorizes its users by allotting them a pair of public and private keys. Where the public key of a user is visible to everyone on the network, the private key is just visible to the owner. Without the proper pairing of these keys, any transaction is impossible.