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What Is Blockchain Technology and How Does It Work?

Do you know that blockchain is a technology that has recently become more popular? People who work in information and technology are not the only ones who like it. In the last ten years, many people have talked about the technology that makes this Bitcoin network work. This technology is so popular because of all the great things it can do for business. The blockchain is not simply about money for a reason. There are several additional applications for it. For example, you may use it for technology and digitalization. Let’s start with a definition of blockchain.

Understanding Blockchain is

There is a computer network called a ‘blockchain’. This network has a shared database called ‘blocks’. As a database, a blockchain stores information digitally in a form that computers can read. Blockchains are best known for their essential role in cryptocurrency systems, such as Bitcoin. They keep a record of transactions that are both secure and independent of anyone or group. There is a new thing about a blockchain that makes it possible to keep a record of accurate and safe data without having to have a trusted third party.

A database usually organizes its data into tables. On the other hand, a blockchain contains its data into chunks (blocks) that strung together like a chain. When this data structure gets employed decentralized, it creates an immutable chronology of data. Completed blocks form a part of this timeline.

Read more: What is Hybrid ERP System?

How Does a Blockchain Work?

blockchain
Source: Al-fanarmedia.org

This is how the bitcoin system, or “distributed ledger technology,” works, so you can see how it works:

  1. It sent to a network of powerful computers, called nodes, to buy and sell bitcoins.
  2. This network has thousands of nodes worldwide that use computer algorithms to make sure the transaction is accurate. That’s what people do when they want to get bitcoins. The first person to finish a new block given bitcoin to reward their work. These rewards paid for with a mix of new bitcoin and network fees, which passed on to the buyer and seller when they buy or sell something. If there are a lot of transactions, costs can go up or down.
  3. A cryptographic confirmation of the sale added to a block on the distributed ledger to keep track of things. The majority of the network then has to agree to the deal.
  4. If you buy bitcoins, each block linked to the previous block of transactions with a cryptographic fingerprint known as a hash, and the sale goes through.

The Use of Blockchain

If you work in the financial industry, there are many ways you can use this technology. Because this technology can help make transactions more accessible and more secure, it can also help make them easier to see and understand. This, of course, can help keep data from corruption or bribery. Besides the use of blockchain in the financial sector, McKinsey has also put together a table of blockchain opportunities for many different fields this year. We go from there, starting with the media, telecommunications, medical, agricultural, and property sectors.

blockchain
Source: Mckinsey.com

The Role of Blockchain in Cryptocurrency 

Here’s what you need to know: Bitcoin only uses blockchain to keep track of payments, but it can also use to keep track of any number of other things. In the past, we talked about how this can become in the form of transactions, votes in a polling place, product inventory, state IDs, deeds to homes, and much more.

Currently, tens of thousands of projects want to use blockchains for more than just recording transactions. For example, they want to make it easier for people to vote safely in democratic elections. The immutability of the blockchain makes it very hard for people to vote fraudulently.

Read more: Quotation, A Must Known Thing for a B2B Business Owner!

The Advantages of Blockchain

There are many good things about this technology in terms of security, speed, and efficiency, in general. This is an in-depth look at the benefits that blockchain can bring.

1. Greater trust 

Members-only networks such as blockchain allow you to ensure that the data you get is reliable and timely and that your sensitive blockchain records will only share with network members to whom you have explicitly authorized access.

2. Accuracy and security

Because there is minimal human contact involved in the transaction, the likelihood of a mistake is reduced. The fact that each transaction must validated and logged by a majority of the network nodes makes it very impossible to falsify or modify information. The fact that a bitcoin cannot spent more than once also prevents fraud.

3. More efficiencies 

The elimination of time-consuming record reconciliations made possible by using a distributed ledger shared across users of a network. A smart contract, which is a set of rules that may put on the blockchain and implemented automatically, can speed up transactions even more.

Conclusion

The main idea of blockchain is to make safe, decentralized, and long-lasting transactions. This is why many businesses become interested in it. There are many security issues, recording processes, and security issues about who owns the data we have now in the digital age. This technology can help solve many of these problems. Suppose you are one of the businessmen who do their financial analysis. In that case, you need to become more careful when you write down your financial records in your statements.

But you don’t have to worry because HashMicro’s Cloud Accounting System makes it easier for you to keep track of your money. Time-consuming manual accounting processes like bookkeeping, asset depreciation calculations, and more can become cut down with just one integrated accounting system.

Interest in getting savvy tips for improving your business efficiency?

Vania Marsha Kristiani
Vania Marsha Kristiani
A Junior Content Writer at HashMicro who Interested in Digital and Growth. Also a life-time learner who always strive to learn and grow.

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