What is blockchain technology and what are its types?
The term blockchain is very common when talking about the crypto market. Both have some unique characteristics that set them apart.
To be precise, blockchain technology is something that plays an important role in cryptosystems. It focuses on maintaining a secure and decentralized record of transactions.
Now let’s find out the definition of blockchain technology before exploring the different types of it and how they work:
What is blockchain technology?
It can be described as a shared and immutable database or ledger that is distributed among the nodes of a computer network. Acting as a database, the information is stored electronically inside the blockchain in a digital structure.
Blockchain technology focuses primarily on facilitating the process of keeping track of transactions and tracking assets in a network. In particular, an asset can be both tangible and intangible.
For example, any physical asset, including vehicles, houses, cash, etc., comes under the tangible segment, while digital assets such as intellectual property, patents, etc., fall in the intangible segment.
Now, blockchain technology can keep track of virtual assets, while enabling them to be traded across the network. Trading on the blockchain network also reduces risk and cuts the cost of services.
The technology enables all users of the network to access the distributed ledger and its record of transactions. Due to the shared ledger, the transactions are recorded only once, making the duplication method redundant, which usually increases the effort in other traditional business networks.
In addition to the immutability of the records, no one can change or interfere with any transaction after it is recorded in the shared ledger. Another common term associated with blockchain technology is smart contracts. This is a set of rules that are stored on the blockchain and executed automatically to speed up transactions.
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Types of Blockchain:
There are several types of blockchain networks, such as public, permissioned or consortium.
Public Blockchain:
These blockchain networks provide access to all participants without restrictions. The majority of cryptos run on these public blockchain networks that are controlled by specific rules and consensus mechanisms.
Allowed Blockchain:
These blockchain networks are governed by an organization that can decide who can participate or have access to the data. Participants who have been granted permission can only access a specific set of data.
Consortium Blockchain:
Consortium networks are the types of blockchains where different organizations share responsibility for maintaining the blockchain. These organizations determine who can access blockchain data.
Bottom line:
Blockchain technology focuses on allowing digital information to be recorded and shared without being tampered with. The blockchain usually stores information in a group, which is also called blocks.
A block has specific storage and capacity and is linked to another block that has been filled previously. These blocks, while connected to each other, form a chain and are therefore known as the blockchain.
