There are three principal technologies that combine to create Blockchain. These technologies include:
- Private Key Cryptography
- Distributed Network
- Incentive to Service Transactions, Security, And Record Keeping
Below, you will find more information about how these technologies work together to ensure reliable digital relationships.
Two people want to perform a transaction online. Each of them holds a “public key” and “private key”. The main component of Blockchain technology is to ensure secure digital identities. Identities are based on the possession of the public and private keys. The combination of these keys performs a consent or a digital signature when a transaction occurs. This digital signature also provides the user with ownership. Having ownership is not enough though. Once authentication is solved, it needs to be combined with a means of approving permissions and transactions. This begins with a distributed network for blockchains.
A Distributed Network
How do you know if a tree falls in a forest if your not there? If you have no visual evidence, how do you know? It is because of examples like this, that Bitcoin uses the blockchain as a sort of “checks and balances” system. This public ledger verifies transactions by solving mathematical equations. The size of the network is vital the the security of the distributed network.
This is one of the most attractive features of the Bitcoin Blockchain. Bitcoin is more secure than some of the largest banks in the world because of this technology. Ethereum, which is only two years old, is more secure than Google.
System Of Record
Cryptographic keys are a useful form of digital interaction. The process starts when one user takes the private key and makes an announcement that you are sending a certain amount of bitcoin to another user’s public key. Blockchains contain a timestamp or digital signature for every transaction. This useful information is broadcasted to all nodes within that network.
Network Servicing Protocol
Public blockchains involve mining. Mining is a unique approach to getting bitcoins, that many Bitcoin users are embracing. By offering processing power to the service networks, blockchains give rewards for the system. The goal of the protocol is to eliminate all possibility that the same Bitcoin was used in a separate transaction at the same time.
Bitcoin seeks to act as property, like gold in this way. Bitcoin and its base units should be unique to have a value. To achieve this, all nodes serving the network should created and maintain a history of transactions. They “vote” using CPU power and agree about a new block or disagree about invalid blocks. If the majority of the miners are all arriving at the same solution, a new block is added to the chain. This clock is then time stamped and may also contain messages or other data. The amount, type, and verification can vary in every case. It all depends on the blockchain protocol rules for whether or not it is a valid transaction.