Introduction to Block-Chain Technology
- In block-chain technology, each transaction is stored in a block structure, which is linked with other blocks, forming a secure and transparent chain.
- This structure guarantees data integrity and provides a tamper-proof record, making block-chain ideal for applications like cryptocurrencies and supply chain management.
Decentralised Database Storage
- Block-chain technology is an advanced database mechanism that allows transparent information sharing within a business network.
- Block chain operates as a decentralised distributed database, with data stored across multiple computers, making it resistant to tampering.
- A block-chain database stores data in blocks that are linked together in a chain.
- Transactions on block-chain are validated through a consensus mechanism, ensuring agreement across the network.
Advantages of using Block Chain
- The key benefit of block chain lies in its ability to provide security, transparency and trust without relying on traditional intermediaries, such as banks or other third parties.
- Its design reduces the risk of fraud and errors, making it especially valuable in industries where secure transactions are critical, including finance and healthcare.
Key Components of Block-chain Technology
Block-chain architecture has the following main components:
A distributed ledger:
- A distributed ledger is the shared database in the block-chain network that stores the transactions, such as a shared file that everyone in the team can edit.
- In most shared text editors, anyone with editing rights can delete the entire file.
- However, distributed ledger technologies have strict rules about who can edit and how to edit.
- Users cannot delete entries once they have been recorded.
Smart contracts:
- Companies use smart contracts to self-manage business contracts without the need for an assisting third party.
- They are programs stored on the block-chain system that run automatically when predetermined conditions are met.
- They run if-then checks so that transactions can be completed confidently.
- For example, a logistics company can have a smart contract that automatically makes payment once goods have arrived at the port.
Public key cryptography
- Public key cryptography is a security feature to uniquely identify participants in the block-chain network.
- This mechanism generates two sets of keys for network members.
- One key is a public key that is common to everyone in the network and the other is the private key that is unique to every member.
- The private and public keys work together to unlock the data in the ledger.
- For example, John and Jill are two members of the network. John records a transaction that is encrypted with his private key.
- Jill can decrypt it with her public key. This way, Jill is confident that John made the transaction.
- Jill's public key wouldn't have worked if John's private key had been tampered with.
