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What Blockchain Technology is and How It Works

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In this article brought to you by mntrends, we are going to provide answers to three important questions about the blockchain technology. This would be done in clarity, brevity, simplicity and in an easy to understand method.

WHY SHOULD BLOCKCHAIN INTEREST YOU?

You must have heard of Bitcoin, Ethereum, Ripple, Litecoin and other virtual currencies. The truth is that you can’t discuss virtual currencies for very long without bumping into references to “blockchain.” This is because blockchain is the technology that powers Bitcoin and many other virtual currencies.

In the case of bitcoin, blockchain functions through the participation of many individuals who offer their computing power to maintain the peer-to-peer Bitcoin network, which sends and receives bitcoins.

Blockchain is therefore viewed by many as an emerging and potentially transformative technology. However, there is a need to take caution as fraudsters take advantage of this technology to aggressively target consumers with a variety of scams.

WHAT IS BLOCKCHAIN? 

Blockchain, can also be called distributed ledger technology. Blockchain technology functions through the participation of multiple individuals. Every “block” in a chain is composed of many records secured by cryptography that describe preceding and current transaction data. Cryptography involves storing and transmitting data in encrypted formats (the Greek word kryptos means hidden).

Blockchain technology is currently the best alternative to records maintained on a central database. This is because risk and management are shared among a number of different users, who are known as “nodes.” Each participating individual has a “node” on the network and works collectively to maintain a permanent list of transactions. This allows all parties on the network to have access to a shared, identical, irreversible ledger of transactions.

Each node participates in the administration of the blockchain, including the verification of new additions to the blockchain. Each node also is capable of entering new data into the database. To add new information to the blockchain, the majority of nodes must reach consensus, which enforces the network’s security.

WHY IS BLOCKCHAIN TECHNOLOGY A WELCOME DEVELOPMENT? 

For first of all, blockchain is attractive because of its management and transparency. As it can also provide permanency to record keeping.

For example, blockchain lists an entire history of transactions, therefore making it possible to verify a specific transaction. This can be done while maintaining privacy and without sharing details of the records to participants who are not entitled to view them. Additionally, because records on a blockchain cannot be altered, it is very difficult for a bad actor to falsify or alter transaction data.

Blockchain is also perceived as a valuable innovation due to the decentralized nature of its technology, which is powered by a number of different nodes that participate in maintaining the entire system and verifying a transaction before it becomes part of the permanent record. Some proponents of blockchain technology view this attribute as its most important feature.

However, having know what blockchain is all about, it is very important for one to be careful. Since Most investors are not experts on blockchain technology, so it is important to be skeptical when evaluating a claim made by a company about its entry into this arena. As a general rule, steer clear of unsolicited and internet-based investment offers — and never wire money to pay for an offer or service. Think twice always so you won’t fall into the hands of fraudsters.

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