Cryptocurrencies are becoming more and more popular, and new applications for these digital coins are constantly being found. So what is the blockchain technology at the top of these new generation technologies?

In short, The blockchain is a decentralized digital ledger that powers cryptocurrencies, NFTs, and smart contracts. The blockchain arranges data, including transactions, into units known as blocks, which then store the data. When a block's capabilities are all used up, it is chained to the block that was finished before it, creating a blockchain.

Let's explore blockchain technology in more detail.

Before explaining in detail, what is blockchain technology like explaining a child?

Consider keeping a dedicated notebook where you record all the critical information you wish to remember. This notebook is distinct from other notebooks. It's magical and when you enter text into it, it becomes locked and cannot be modified. It functions like a secure secret code to keep everything safe.

Now, let's imagine that all of our friends (miners, validators) have the same kind of magical notebooks, and every time they write something important, it gets locked too. These magical notebooks are connected to each other through a network, just like a spider's web. This is what is called "blockchain."

So, every time you want to share something with friends, like a drawing or a message, you write it in your notebook, and it gets sent to all your friends' notebooks. But remember, once it's locked in your notebook, nobody can change it, and everyone can see it.

So what kind of information is contained in this magical notebook?

For example:

• It may be the information of a cryptocurrency that one person sends to another. (who is the sender, who is the recipient, who sent how much money to whom, etc.)

• It may be information about a person minting an NFT on the Bitzone NFT marketplace.

• It may be information about the cryptocurrency that someone has withdrawn from crypto exchanges such as Binance, Coinbase to a crypto wallet such as Metamask.

So blockchain technology underpins digital cryptocurrencies like Bitcoin, Ethereum or Solana. A blockchain is essentially a catalog of transactions that anybody can examine and validate. The Bitcoin blockchain, for instance, records each time a person gives or receives bitcoin. Cryptocurrencies and the blockchain technology that powers them enable online value transfers, doing away with the need for middlemen like banks or credit card firms.

In fact, all these analogies and examples prove to us again the most basic features of blockchain: Transparency, Security, Decentralization, Immutability, Consensus

So what is blockchain technology?

By utilizing a decentralized network and cryptographic hashing, Blockchain, or distributed ledger technology (DLT), provides transparency and immutability to the past of any digital asset. It is an advanced database that enables transparent information sharing within a network, with data stored in blocks that are interconnected within a blockchain database.

The data remains constant over time because any changes or deletions to the chain require agreement or consensus from the network. Blockchain technology, therefore, can be used to create an immutable ledger for managing transactions such as orders, payments, and accounts.

There are built-in mechanisms in the system that maintain consistency in the shared view of transactions and prevent any unauthorized entries.

What is the importance of blockchain technology?

Due to its ability to scale transparency, eliminate fraud, and minimize security threats, blockchain is a very revolutionary and exciting technology.

Traditional database systems present several challenges for recording financial transactions. Take the selling of a car, for instance.

The ownership of the property is transferred to the buyer once the payment has been made. Although both the buyer and the seller have the option to monitor the financial transactions on their own, neither one can be considered a trustworthy source. It's possible for both parties to falsely claim that the payment has been made, and it's also easy for either one to deny such claims.

To avoid any legal issues, transactions must be monitored and verified by a trustworthy third party. The transaction is complicated by the presence of this centralized authority, which also creates a weak point. For instance, both parties may be harmed if the main database is hacked.

Blockchain eliminates these problems by developing a decentralized, unchangeable mechanism for transaction recording.

Let’s think about another example. In real estate transactions, blockchain technology creates distinct ledgers for both the buyer and seller. All transactions are automatically updated in real-time on both ledgers, subject to the approval of both parties. If any fraudulent activity or tampering with previous transactions is detected, it would affect the integrity of the entire ledger. These unique features of blockchain technology have made it applicable in various fields, including the creation of digital currencies like Bitcoin and Ethereum.

How does blockchain work?

The name "blockchain" is not by chance: It is common to refer to the digital ledger as a "chain" made up of distinct "blocks" of data. Whenever fresh data is added to the network, a new "block" is created and appended to the existing "chain". This necessitates updating all nodes' copies of the blockchain ledger to ensure consistency among them.

The main factor contributing to blockchain's high level of security is the process of creating new blocks. Prior to adding a block to the ledger, it must be verified and approved by a majority of nodes to ensure the authenticity of the data. They could entail verifying that new transactions in a block are genuine or that coins haven't been used more than once for a cryptocurrency. A standalone database or spreadsheet, where one individual may make changes without supervision, is not the same as this.

Also, cryptography is used to safeguard transactions, thus in order for nodes to complete a transaction, difficult mathematical equations must be solved.

Although it is lengthy to explain the functions underlying blockchain technology, we can simplify these steps to give you an idea of how blockchains work in general:

1.  The transaction

A blockchain transaction records how assets are exchanged between network parties, whether they are tangible or digital.It is stored as a data block and may contain information like Who participated in the deal? What transpired during the deal? When did the deal actually happen?

2. Consensus

For a transaction to be considered valid, most users on the decentralized blockchain network must agree that it was properly recorded. The rules for such consensus may vary depending on the type of network, but they are typically established at the onset of the network's formation.

3. Connection of the blocks

The process of recording transactions on the blockchain involves creating blocks that serve as ledger book pages once all parties have reached an agreement. In addition to the transactions, each new block is assigned a cryptographic hash, which links the blocks together to form a chain. Any manipulation of the block's contents results in a change in the hash value, making it easy to detect data tampering.

This interconnectedness of blocks ensures their immovability and strengthens the security of the entire blockchain as each new block reinforces the verification of the preceding one. This is akin to building a tower using wooden blocks, where the blocks can only be stacked on top of each other, and removing a block from the middle leads to the collapse of the entire structure.

4. Sharing

Each member in the system receives a duplicate of the latest master ledger.

In which areas is blockchain used and can it be used?

Blocks on the blockchain of Bitcoin are now known to hold transactional information. On a blockchain now, more than 23,000 more cryptocurrency systems are active. But it turns out that using blockchain to store information about other kinds of transactions is a secure method. Let’s look at some areas that blockchain used and it can be used.

• Health Care

General information like age and gender, or maybe some important  medical history information like vaccination records or vital signs, are good examples of health data that is appropriate for blockchain. None of this data by itself could be used to individually identify any one patient, which makes it possible to place it on a public blockchain that many users may access without having their privacy violated.

As specialized connected medical devices become increasingly popular and tightly tied with blockchain, they can be linked to a person's health data. The generated data will be added to individual medical records and stored on a healthcare blockchain by devices. The siloing of data produced by linked medical equipment is currently a huge issue, but blockchain could be the link that unites such silos.

• Retail

Retail businesses utilize blockchain technology to oversee the movement of merchandise from suppliers to customers.

Amazon Retail, for example, has registered for a patent for a distributed ledger system that would use blockchain technology to validate the authenticity of every product sold on the platform. Amazon merchants may trace their global supply chains by allowing stakeholders such as manufacturers, couriers, distributors, end users, and secondary users to submit events to the ledger after enrolling with a certificate authority.

• Banking and Finance

Incorporating blockchain technology into its corporate processes could benefit the banking sector the most. Financial institutions operate during standard business hours, which typically span five days a week. Consequently, if you deposit a check at 6 p.m. on Friday, it's unlikely you'll receive the funds in your account until Monday.

Due to the enormous amount of transactions that banks must settle, even if you make your deposit during business hours, it may still take one to three days for the transaction to be verified. Blockchain, however, is always active.

As soon as a block is added to the blockchain, regardless of the day or time of the week or holidays, customers may have their transactions executed in minutes or seconds. Blockchain technology has given banks the capacity to quickly and safely move money between businesses. Due to the scale of the amounts involved, even a little period of time during which the money is in transit may be extremely expensive and risky for institutions.

The money and shares are frozen for the three days it takes for the settlement and clearing procedure for stock traders to complete (or longer if trading overseas). Blockchain has the potential to cut that time in half.

• Voting

As was already noted, a blockchain-based voting system may be possible. The utilization of blockchain technology in the West Virginia midterm elections held in November 2018 showcased its potential to eliminate election fraud and enhance voter turnout.

It would be nearly impossible to tamper with votes if blockchain technology is employed. The blockchain technology will also uphold electoral openness while lowering the number of people required to carry out an election and giving officials access to results almost immediately. Consequently, there would be no necessity for vote recounts and no justifiable basis to worry about the occurrence of election fraud.

• Currency

Blockchain technology serves as the underlying structure for cryptocurrencies such as Bitcoin. Also The Federal Reserve is in charge of the US currency. A user's money is theoretically subject to the whims of their bank or government under this system of central power. All of the  information of a client is in danger if their bank is hacked.

The security of a client's funds could be jeopardized in the event that their bank collapses or if they reside in a country with an unstable government. Some banks that were on the verge of failure received government aid in 2008. These concerns prompted the creation and development of Bitcoin.

The decentralization of Bitcoin and other cryptocurrencies is made possible by blockchain technology, which distributes its operations across a network of computers. This lowers the risk as well as the transaction and processing costs.

Pros and Cons of the blockchain technology