Although blockchain technology is often associated with cryptocurrencies, there are many other implementations. In this video, you’ll get an overview of the processes used with blockchain technologies.
A blockchain is a distributed ledger. It’s a way to keep track of a particular event. This is something that many people can participate in, so that this ledger can be distributed throughout many different devices. Because this ledger is distributed across multiple devices, we can now have checks and balances. We can have an efficient form of processing these transactions, and everyone can see exactly what’s happening on the blockchain. If you’ve ever purchased anything with cryptocurrency, then you’ve used blockchain technology for your payment processing. This can also be done for digital identification. We can keep track of components as they move along different sections of a supply chain, or we could use this for secure voting.
Regardless of the underlying application, the fundamentals of the blockchain are the same across all of these. The first step is adding a transaction. We might be voting online, we might be adding inventory into a supply chain process, or we may be purchasing something with cryptocurrency. Before the transaction is confirmed and verified, a copy of the transaction is sent to all of the devices that are participating as part of this blockchain. All of these devices are maintaining ledgers, and they can check balances and other information that’s important for completing this individual transaction.
Once this transaction is verified, it’s added into a block of other transactions that have also been verified. This is the block of the blockchain, and it allows us to process many transactions at the same time. To provide some integrity to the process, we’ll use a hashing function to be able to hash all of these transactions, and we will add the hash to the block. That way if anything changes with this block, we know that the block was modified, and therefore, the block would be invalid. Once that hash is created we have a complete block that we can then add to the existing blockchain. So this block is now copied to all of the devices maintaining that ledger across the entire blockchain network.
One of the concerns with having a distributed ledger is that any of these nodes on the network might want to make changes to something that has already been verified. That’s why the hash was added to each one of these blocks, so that if any changes are made we’ll know immediately that this information has been modified. And since we’re able to verify the hashes that are part of every block, we will know immediately if any changes have been made to any of this verified information. And we can discard anything that doesn’t match or verify with that existing hash.
This is a broad overview of the blockchain process, but every blockchain technology has different minor nuances that make it unique from others. And there may be different features or different capabilities based on the type of blockchain that you’re using.