Blockchain technology is revolutionizing the world as the digital economy takes hold. The demand for this technology is rapidly growing, as more investors are opting to cash in their investments. If you are trying to get started in this venture but have no clear idea about, here are questions to help you.
Beginners Guide: The basic common questions you should know about blockchain technology.
1. What is blockchain?
Blockchain is a distributed ledger that provides immutable records of transactions which are protected by the cryptographic algorithm.
2. What is a hash pointer?
Every block in blockchain comes with a self-pointer that acts as a link to the block before it. So every blockchain has a header that has the transaction data, timestamp, and the hash of the previous block. Therefore, every block is linked to the block prior to it using a hash pointer.
3. What are block identifiers?
These are methods used to identify blocks in the blockchain. There are two ways to do this. These are:
- Block header - points to the previous block
- Block height - the number of blocks in the blockchain.
4. What is a block in blockchain technology?
As earlier said, blockchain is a distributed ledger that contains a list of transactions. Now, these transactions are stored in the form of blocks. The blocks maintain orders of transactions in the blockchain in a sequential way.
5. What are the different types of blockchain?
There are three different blockchains:
- Public blockchain - open to everyone and anyone can join. Examples are bitcoins, Monero, and Ethereum
- Private blockchain - only allows specific people and organizations to verify and add transactions to blocks. Examples are multi-chain, block stacks, etc.
- Consortium blockchain - This is also a private blockchain. However, the consortium is managed by a group of individuals or a consortium of members.
6. Why blockchain is a trusted approach
- Immutability - This means that once a transaction is written on the ledger, nobody can change.
- Safe and secure - A cryptographic algorithm protects all stored data, and only the owner can access.
- Transparency - any transaction can be traced back.
- Open-source nature - compatible with every business application.
7. What types of records can be kept in blockchain? Is there any restriction on the same?
No! Blockchain does not give restriction to any type of records you want to store. You are free to store any records, be it your business transactions, medical records, and many more. Cases of hacking and data leak have made several companies and organizations rely purely on blockchain for their data storage.
8. What are the key features of blockchain?
- Decentralized network
- Distributed ledger
- Safe and secure
9. Discuss the role of encryption in blockchain?
Encryption is a way used to secure data from a leak or third parties. A person can use encryption when he doesnâ€™t want someone else to see his data. The data is encoded using a cryptographic algorithm. The receiver of the data has a cryptography key that decrypts the coded data. Blockchain takes this approach because it makes their system secure and ensures the blocks are authentic.
The questions above are aimed at helping the beginner get an understanding of blockchain technology. If you have not yet ventured into blockchain technology, then now is the best time when it is at its nascent state.