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Blockchain and its applications

Blockchain is a decentralized and distributed digital ledger that records transactions across many computers in a way that is secure, transparent, and resistant to modification. Here’s a simple explanation using an example:

Example: Blockchain for a Digital Currency

Imagine a digital currency called "CoinX" that operates on a blockchain:

  1. Decentralized Network: Instead of a central authority (like a bank) managing transactions, CoinX transactions are recorded and verified by a network of computers (nodes) connected via the internet.

  2. Blocks and Transactions:

    • Transactions made with CoinX are grouped into blocks.
    • Each block contains multiple transactions, like records in a ledger.
    • For example, Block 1 might include transactions A, B, and C.
  3. Chain of Blocks:

    • Each new block is linked to the previous one, forming a chain (hence the name blockchain).
    • This linking is done using cryptographic hashes: each block contains a unique hash (digital fingerprint) of the previous block.
  4. Security and Consensus:

    • Nodes in the network compete to validate transactions and create new blocks (this process is called mining).
    • To add a block to the blockchain, a consensus mechanism (like Proof of Work or Proof of Stake) ensures that a majority of nodes agree on its validity.
    • Once added, a block is cryptographically secured and becomes part of the immutable blockchain.
  5. Immutable and Transparent:

    • Once recorded, transactions cannot be altered or deleted without changing subsequent blocks, making the blockchain tamper-resistant.
    • Every participant in the blockchain network can view the entire transaction history, promoting transparency.

Simplified Summary

Real-World Applications

Published on: Jul 08, 2024, 11:27 PM  
 

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