Those who have invested in cryptocurrencies would have heard about the term blockchain for sure. Even those working in the finance domain would have heard this term. While many of them know what is it, a few do not know what it is and wish to learn about it. If you are one such person, you are in the right place to gain some basic knowledge on this term.
1. What is Blockchain?
Blockchain is nothing but a system of recording information. The good thing about this recording system as against any such system available in the market is that it is something hard to cheat, hack or change.
You can think of blockchain as a digital ledger of transactions. These transactions are duplicated and distributed across the whole network of computer systems on the blockchain. The many transactions that take place in this network are added to the chain in each block. As and when a new transaction is done on the blockchain by one of the users, a record of the transaction will be added to his ledger. This will happen as and when a new transaction is done by any user of the network. This decentralized database managed by many people taking part is referred to as Distributed Ledger Technology or DLT.
2.Properties of DLT:
The good thing about blockchain is that it is a kind of DLT, where transactions are recorded with a cryptographic signature that cannot be muted, known as a hash.
Now, you know that blockchain is a type of DLT. So, you can understand the following properties applicable to DLT apply to the blockchain as well:
- It is time-stamped
- All participants of the network agree to validate every transaction added
- The identity of those participating is either pseudonymous or anonymous
- All records are encrypted individually
- A blockchain is programmable
- To ensure complete transparency, all participants of the network have a copy of the ledger
- Any record that has been validated cannot be changed or the record is irreversible.
Now, with these properties, you can very well understand that blockchain is truly an innovation that will help the finance domain in many ways.