The blockchain is a decentralized database network in which information is stored in a secure and transparent environment.
Industry experts estimate that most of the financial infrastructure will be converted to blockchain solutions in the next 10 years. Banks and stock markets are already working on projects to make the transfer and transaction of securities faster, more transparent, and less prone to error. But what exactly is the “blockchain”?
Put simply, the blockchain is a huge database distributed on a decentralized network. It belongs to no one, and all participants have the same access rights. This makes the blockchain both flexible and secure against counterfeiting and fraud.
Here are the main characteristics of blockchain:
- A blockchain is a decentralized database secured from external tampering
- A blockchain is a disruptive system that ensures mutual trust and collective consensus
- The blockchain is a useful infrastructure for applications, crypto tokens and -currencies (i.e., Bitcoin), smart contracts, digital identification, logistics, and many other things
Types of Blockchain:
Different types of blockchain technology exist for different applications. Suggested by Satoshi Nakamoto in 2009, public blockchains don't restrict access: anyone who has access to the internet can get on the network and start validating blocks and sending transactions. This applies to the cryptocurrency transactions such as Bitcoin or Ethereum.
Unlike the public blockchain, the access is not open to the public and its access verification is stricter and controlled by a single centralized entity in the network. This reduces the transparency and security of the system but has advantages such as higher speed in both decision making and transaction processing and an easy shift from Proof of work to proof of authority, a shift that is much more complex to execute on a public blockchain.