Blockchain technology and its types

Blockchain technology and its types

Blockchain technology and its types are the necessary topics to be discussed. Before introducing blockchain, it was first described by Stuart Haber and W. Scott Stornetta. But it has to be said that it was Satoshi Nakamoto who invented the first blockchain network. To understand blockchain technology, you should imagine a world where you can save and store your money without the interference of any banks. You can store it in an online wallet that is disconnected from the bank. You can send it or move it without the permission of any centralized agents, and you need not worry about any third party stealing it. To be very simple, you are your own bank, and you have complete control over your money. This is happening in this world right now using blockchain technology. Many people are afraid of using this technology because of a lack of knowledge, and some people don’t wish to use it because of the negative impacts that they forecast. But in the 90’s, many were afraid of the internet, but today, without the internet, the world couldn’t run. Who knows, maybe in the future, blockchain will also rule the world. In this blog, you will get to know how blockchain works and its types.

The blockchain works in the same manner as the internet could run email. In the same way, blockchain technology makes cryptocurrencies like bitcoin, etc., work, here we have blocks which may contain a certain amount of MB which could accommodate a particular number of transactions. After it reaches the limit, the second block will open. It will form a chain of transactions by storing information in a block that is connected to the previous block by hash codes that act as fingerprints. In Blockchain technology and its types there are four types. Public blockchains, Sidechains, Hybrid blockchains, and Private blockchains. In the case of public blockchains, they are open and decentralized networks of computers. It can be accessed by anyone to request or make transactions. This type of blockchain works on two mechanisms. Proof-of-work and Proof-of-stake . Examples of public blockchains are the Bitcoin and Ethereum blockchains.

Whereas private blockchains are not open and centralized. It means it can’t be accessed by anyone who wants. People who wish to join this should get permission from the system administrator. Hyper ledger is an example of a private blockchain. Next come hybrid blockchains. It is also called “consortiums.” It is something of a combination of both the blockchains that we have seen above. It contains centralised as well as decentralised features. Examples of this hybrid or consortium blockchain are Dragonchain and R3. The last is Sidechain. A sidechain is a separate blockchain that acts in parallel to the main chain. It acts as an extension to the parent blockchain (the mainchain). It is created by introducing an off-chain process that will propagate the data between both blockchains.

Let us take Bitcoin, the king of cryptocurrency. If any bitcoin is sold or purchased, the data will be entered and transmitted to a network of powerful computers. This is known as nodes. The transaction will be confirmed by mining. The miner who first completes a new block will be rewarded. The network fees and rewards paid with the newly minted bitcoin will be passed on to the buyer and seller. This fee may rise or fall depending on the transaction volume. After the purchase has been confirmed, the sale is added to the distributed ledger. A ledger is nothing but a passbook we use to store our transaction information in the same way the ledger will store the data which is visible to all by random ID’s without giving clue that it is your ID and anyone can’t access. The block will be chained to all previous blocks using cryptographic fingerprints known as hashes, and the sale will be processed.