A block is nothing but the records of transaction done, that could be any transaction data like medical data, cryptocurrencies location or any records in the language of cryptocurrency. Once such block is completed it is then added in chain resulting Blockchain.
As cryptocurrencies are encrypted, processing such transactions means solving complex mathematical problems and this problem become more complex over time as the blockchain grows. Once this complex problems are solved people are rewarded with cryptocurrency. This whole process of solving and rewarding is called “Mining”. Mining of cryptocurrency can be done by anyone if they have powerful machines.
Due to Bitcoin we came to know about Blockchain. Satoshi Nakamoto’s was one introduced it to the world. Soon after Bitcoin got recognition it was copied, forked and updated to make better cyrptocurrencies such as Dash, Litecoin etc. There are many cryptocurrencies in market.
Types of Blockchain
After Bitcoin introduced in world many Blockchains was emerged.
- Blockchain of Public:
As the name suggest it is for the people, meaning anyone can participate in writing, reading or updating the blockchain. As no is in charge of such Blockchain so the obvious question in mind is Who will take the major decisions in such Blockchains. Answer is simple it is done by various decentralized consensus mechanism such as POW – Proof of Work and POS – Proof of Stakes.
Bitcoin, Litecoin, etc.is under Public Blockchain:
Anyone can anytime run BTC / LTC node and start mining
Anyone can audit the Blockchain Transactions.
Anyone can make transaction on BTC/LTC chain.
- Owned by Individual or Organization
Such Blockchain is owned by Individual or Organization, unlike public blockchain one cannot review or audit or read/write, major decision is done by the authority who is holding it.
Same goes for mining, explicit rights must be given by whosoever is in-charge. Concern authority must provide the mining rights. That’s what makes it centralized again where various rights are exercised and vested in a central trusted party but yet it is cryptographical secured from the company’s point of view and more cost-effective for them.
Anyone cannot run node and start mining
Anyone cannot audit the Blockchain Transactions.
Anyone cannot make transactions.
So question arises why do we need them..?
– Huge Server Cost will be reduce by such Blockchain method
– Redundant work is reduced
– Cost effective and fast.
– No geographical limits, work can be done faster in distributed consensus between interested parties.
There are many advantages of using Blockchain which will I think can be used in different industry. For now many financial institutions are getting attracted towards it. But time will surely tell which blockchain will survive the overwhelming demand and need.
This was my understanding I would like to hear more on this. Please do comment down below with your thoughts and understanding.