Blockchain Fundamentals with Whitepigeon Network
How Does Blockchain Work?
Often when we talk about cryptocurrency, we talk about blockchain networks. But ever wondered what blockchain technology is, and how does it work?
What is a blockchain?
Blockchain is a shared, digital ledger that eases the process of recording transactions and tracking assets in a business network. Virtually anything of value can be tracked and traded on the blockchain network. A blockchain can store information about cryptocurrency transactions, NFT ownerships, or DeFi smart contracts.
Why is blockchain important?
Businesses run on information and blockchain is ideal for delivering fast and accurate information. Blockchain provides immediate, shared and completely transparent information stored on an immutable ledger that can only be accessible to permissioned network members. A blockchain network can track orders, payments and much more and lets you see the details of the transactions end-to-end.
Benefits of blockchain
Trust: Blockchain creates trust between different entities, in return, these entities are willing to engage in business dealings that involve transactions and data sharing that they may have not done otherwise.
Decentralized structure: Blockchain enables data sharing within an ecosystem of businesses where no single entity is in charge of facilitating all that information sharing. Blockchain, for its decentralized nature, solves this dilemma.
Improved privacy and security: Another benefit of this emerging technology is the security of blockchain networks. Blockchain creates an unaltered record of transactions with end-to-end encryption, that shuts out fraud and unauthorized activities. .
Reduced cost: Blockchain can also cut costs for organizations by creating efficiencies in processing transactions. Blockchain helps businesses cut costs by eliminating the middlemen that are the vendors and third party providers.
Types of blockchain networks
Public blockchain networks: Public blockchain such as Bitcoin, allows anyone to join and participate. To encourage new participants to join and keep the network agile, the public network operates on an incentivizing scheme. The drawback of a public blockchain network may include little to no privacy for transactions as well as weak security.
Private blockchain networks: Similar to public networks, a private blockchain network is a decentralized peer-to-peer network. Unlike public networks, a participant can only join private blockchain networks through an authentic and verified invitation. A private blockchain network is a distributed ledger that operates as a closed, secure database.
Permissioned blockchain networks: Permissioned blockchain network is a mix of public and private blockchain networks. Allowing participants to join after verification of their identity. Mostly, businesses with private blockchain will set up permissioned blockchain networks. The participants need to acquire an invitation or permission to join.
Consortium blockchain networks: In consortium blockchain, multiple industries can share the responsibilities of maintaining a blockchain. The pre-selected industries determine who may be allowed to submit transactions or access the data. It’s ideal for business when all the participants need to have a permissioned and shared responsibilities of the blockchain network.