Mohammed NaserBlockchain technology is used by many industries as a safe and economical way to maintain records for digital transactions. Read more.
Blockchain technology is making waves all over. Many industries are now using blockchain applications as a safe and economical way to maintain records for digital transactions and create and manage distributed databases.
However, many people are still not familiar with the concept. So, here is an attempt to define what blockchain technology is and explain its advantages and other attributes.
What is Blockchain Technology?
A type of Distributed Ledger Technology (DLT), blockchain technology is a digital system used to simultaneously record transactions and related data in multiple locations. In simple terms, blockchain technology is a record-keeping methodology designed to make data secure and unforgeable. Each computer in such a network holds a copy of the ledger to prevent a single point of failure. With blockchain, all copies of the documents are updated and validated at the same time.
Blockchain is also seen as a type of database. However, it differs from conventional databases in the storage and management of information. Unlike traditional databases, blockchain stores data in blocks that are chained together digitally. Furthermore, a blockchain is a decentralized database that is managed by computers, unlike a central computer for traditional databases.
It is worth noting that the first widespread application to use blockchain successfully is Bitcoin, the cryptocurrency.
How Does Blockchain Work?
Blockchain technology functions through a multi-step process. Here is a closer look:
- An authorized user inputs transactions. These transactions need to be authenticated by the application.
- The successful input creates a block representing the transaction that took place.
- The block of data is sent to every computer in the network.
- Authorized nodes verify the transaction. The new block is then joined to the existing blockchain.
- The update is spread across the network, finalizing the transaction.
How Is It Used?
As mentioned, cryptocurrencies use blockchain technology. The finance industry, including Governmental banks, uses blockchain technology as a foundation for digital currency exchange. There are other uses too. Logistics companies use the tech to track and trace products in the supply chain. Other industries adopting blockchain include entertainment, law, etc., for smart contracts and other methods to transfer and protect the legal rights of people and entities.
What Are the Advantages?
Security is probably the most significant advantage of blockchain technology. Since the whole system is connected, there is no single point of failure, ensuring that the transactions are secure. Compared to non-DLT-based transactional systems, the trades are more secure, although there have been some complaints about the lack of speed in the execution. There is no issue if one node goes down because other nodes have their copies of the ledger. Furthermore, confirmed information is complicated to reverse, reducing the chance of fraud and backtracking. Blockchain technology is also cost-efficient since it reduces spending by eliminating third-party organizations.
How VEXXHOST Cloud Solutions Can Help
Blockchain technology is growing day by day and needs support systems to function correctly. This is where VEXXHOST's cloud infrastructure solutions come in. Our cloud services are based on OpenStack, making the environments free from licensing fees or vendor lock-ins. For many of our clients, private clouds are the preferred choice because of their highly scalable and secure nature.
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