How Transactions Are Recorded In Blockchain
The mere understanding of blockchain takes time, and for the layman the technical terms falls as heavyweight jargons. To fathom the depth of the intelligent technology, which is the key to smart and safe money making, and many other things in today’s ecommerce, here is a simplification of the basic concept behind blockchain.
What is blockchain
Blockchain is a digital ledger, where data is maintained and arranged in blocks, which are encrypted for safety, and these blocks are connected to form a chain of transactions. The ledger is owned by an authority, and debit and credit transactions are recorded.
How transactions proceed through blockchain
The transaction between two people proceeds in blockchain as it happens in conventional bank transactions, but with much more security. The core concept stays the same, that ever credit and debit for an account holder has to be recorded, and if the money will be transferred from one account to another will be controlled and routed and recorded by the bank. In the same way all transactions done through the blockchain technology flows through it, and gets recorded and controlled through it with high security and encryption.
Where blockchain is different from a bank account
A bank account is held in a bank, which is under the ownership of a centralized entity. But a blockchain account is totally decentralized. There is no single ledger which stays with any central body. The ledger has several copies, and these copies are distributed among a strongly connected network of computer distributed worldwide. These computers have the records in their hard drives, and these machines are called nodes.
The nodes connect with each other through a software program, and this is called a P2P or peer to peer client. The ledgers in all the nodes get synced at one time and always on time through this P2P client.
How a transaction happens in blockchain
When a transaction is initiated in blockchain, the transaction gets converted into a highly secured encrypted state, and this is called a block. Now the block is sent for verification to all the nodes. The nodes verify them, at the same time everywhere. And then the verified block is added at the blockchain ledger, and updated worldwide. As this block is added beneath the previous records in the ledger, another data block is added to the chain, thus increasing the length of the blockchain.
Now you get to see why the term blockchain is used. A verified block can then be executed, and, the Bitcoin like cryptocurrencies works with this principle.