Bitcoin Terms is a new technology shaking the tech market because of its decentralized and secured nature. It is a shared database that can be accessed amongst different nodes of computers.
As a database, it stores data in digital format. It is popular because it is the main component of the growing demand for bitcoin. Various innovations are happening around the sector because of their allegiance to absolute data security. As there is no centralization of data, a third party needs to generate trust.
Difference between traditional database and blockchain
One of the main differences between traditional and blockchain databases is storing the data. As bitcoin investors are investing tons of money, you need to know why it suddenly tractions attention. In a traditional database, information is stored in a table format, whereas, in blockchain technology, it collects data in groups and store it in block format.
Every block has a specific capacity, after which it fails to keep any data and share it with another new league and make a chain with the previous block. Thus, data is stored in blocks and chain format. Once new data emerges, it will be held in another league. This data structure is irreversible.
When a new data block is added to the chain, it gives an exact timeline when it is added. Another interesting fact of blockchain is that different types of information can be stored hassle-free. This decentralized blockchain is immutable, and as there is a timeline of every new data added, all of the transaction is viewable with absolute transparency.
How does blockchain work?
The primary purpose of blockchain technology is that the digitally stored information can be distributed but not edited. Thus, it creates a series of unhindered data. This ledger of transactions cannot be altered or destroyed, making it safer to store.
It was proposed in 1991 as research, but it started dominating in 2009 when many blockchain applications came into force. At first, cryptocurrencies and then smart contracts or non-fungible tokens (NFT).
What does decentralization mean?
In this, you should know why blockchain is the core part of bitcoin transparency as an investor. Imagine you own a company that deals with food technology. Now you have different clients, so you have plenty of data. In earlier days, or even now, many companies kept servers or all the computers in the same place and were connected with a shared network.
Now, if there comes a sudden electricity fault or a person with ill intention deletes data with a single click, your client’s information will be lost. Here comes the savior of blockchain technology.
As discussed earlier, the same amount of data is shared amongst different nodes, so if there is a mishap at one node or one place, it will not affect the whole data set. Or, if someone tries to edit the data, the other nodes within the network will self-verify and detect the fault. This transparency is the reason why bitcoin has emerged as a trustable currency.
Security aspects of blockchain
The benefits of being decentralized are discussed before. Apart from that, it adds chronologically if the new block of data is created. It means it is added to the last block, so changing the data of previous blocks of the chain is extremely difficult. Suppose a hacker tries to change the particular block’s data; it will be noticed by other points also as every data block has a hash code.
Hash code is a mathematical function that transforms every data into a set of numbers. Changing the data of a block will change the hash code also. And when cross-checked, it will validate with others, and being an altered code, the hacker’s data will become illegitimate; thus, the purpose of hacking will fail. Hacking 51% of the chain will also require a tremendous amount of money. Blockchain technology is the center of bitcoin ensures this trust.
If you are an investor or planning to be one in the recent future, you should be aware of every aspect of the portfolio. And if interested, you should know why blockchain technology is becoming the next goldmine.