Understanding the Distinctive Features of the Blockchain Technology7th October 2021
What is Blockchain Technology? Think of a Blockchain as a new novel, digital form of digital recording-keeping. The ledger or log, as it’s sometimes called, is maintained by multiple nodes all working together. The reason why the ledger must be kept in such a fashion is to limit the possibility of hacking. However, its distributed nature also gives it wide applications beyond Cryptocurrency itself.
One of the main features of the ledger, which is maintained by several independent nodes, is that transactions are secured and replicated across the network. Unlike with centralized systems like those found in banks, or other physical locations, the process of confirming a transaction on the ledger is carried out entirely digitally. This means that even if one or more physical locations experience a problem with their computers, the entire system can still be operational.
This brings up the next feature of the ledger that’s so attractive to cryptosporters. The distributed nature of the ledger makes it highly resistant to intrusion by outside parties. This includes attempts to manipulate the ledger itself, such as through the use of’spinning’ scripts to change the ledger and create what’s known as ‘irregular transactions’. Another major concern for most people is that this kind of activity could easily be used to conduct illegal activities. Thankfully, due to work being done by technology firms like Blockstream, there is every hope that these threats will be put to rest.
As Nakamoto explains in the above quote, however, the distributed ledger presents much more than the mere prevention of manipulation. For instance, by using nakamoto’s original algorithm, anyone can create a ‘chain’ of transactions that can be cryptographically linked together. This provides a highly scalable and secure method of conducting business. Nakamoto himself is no fan of centralization; however, he does believe that a strong central control over the distribution of the ledger is not necessarily bad, especially given the distributed nature of the technology.
Because Nakamoto’s algorithm is so effective, there are now dozens of currencies being used as a form of transaction on the distributed ledger. Several of the leading currencies are listed as being backed by the technology behind bitcoin: the bitcoin protocol. A growing number of retailers and merchants are taking advantage of this fact. They are using the money transfer methods behind the main line of currency behind the bitcoins to make it convenient for their customers to purchase goods and services. This provides a lifeline for those who prefer using cryptocurrency instead of the more traditional way of paying for transactions. Those who use cryptocurrencies like bitcoin can buy and sell them securely through a crypto app like https://www.coin.cloud/. Without the need to rely on banks and other third party entities for these kinds of transactions, these entrepreneurs gain a level of security and peace of mind that they wouldn’t otherwise have.
With all the features detailed above in mind, it’s easy to see why the term ‘blockchain’ has become so widely used. As mentioned earlier, a distributed ledger, often called a public ledger, is where the records of global transactions are recorded and made public. Transactions made on such ledgers are secured by the power of the individuals holding them; therefore, the transaction is fully transparent and virtually risk free. There is no centralization or other middleman involved; therefore, the entire system functions according to the rules of the network itself. In this way, the advantages of bitcoin and other currencies as well as the advantages of cryptospaces like the public blockchain are mutually beneficial and inseparable.
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