The world is evolving, and new concepts are taking over as the new normal. The use of fiscal currency is starting to fade, and we are now seeing more decentralized forms of transactions, such as blockchain transactions.
Many online transactions, investments, and trades can be traced to blockchain technology. We can see the use of blockchain in cryptocurrencies and other aspects, and it is gradually replacing the old ways of doing things.
We want to look at all there is to know about the blockchain, from the definition to the uses, application, and much more. We will answer questions on how to delete blockchain accounts and other FAQs.
What Is a Blockchain in Simple Terms?
Without all the technical jargon, you can imagine a blockchain as a database shared on different computers, and the database exists in blocks.
What Is Blockchain Technology and How Does It Work?
We’ve given you the overly simplified version of a blockchain, but now we want to break it down.
Blockchain technology is also referred to as Distributed Ledger Technology. It is a ledger that contains records of transactions, and these ledgers can be found in the block. A block is a single unit containing transactional records, and multiple blocks make up the blockchain.
The blockchain exists over a vast network of computers connected through peer-to-peer nodes. One feature that makes the blockchain so special is the decentralized system, there is no single owner to the blockchain.
The owner can only carry out transactions on the blockchain, and a digital signature is required. Transactions carried out via the blockchain are very secure and open for all to see.
The servers connected to the blockchain have a record of the transaction, and it remains permanently recorded and untouchable.
When we hear blockchain, the first thing that comes to mind is cryptocurrency. However, cryptocurrency is just an application of blockchain technology. There are several other ways we can use blockchain, and we’ll look at some of them later in the article.
How Does Blockchain Work?
We’ve been hearing that the blockchain is a decentralized ledger containing transaction records over a network of computers. However, this doesn’t help us understand what a blockchain is and how it works.
Now, we want to take a closer look at the workings of a blockchain and the different concepts that make it up.
The blocks are the basic units of blockchain, and three elements make up a block.
The data refers to the transactional record imprinted in a block, and it is the basic component of the block. A nonce is another feature that makes up the block, and it refers to a 32-bit whole number.
A nonce is a number computed at random once a block is created. The nonce is then used to create a block header hash. The block header hash is a 256-bit number attached to the nonce.
When a block is generated, the nonce and hash generated are used to mark the block permanently, so transactions on the blockchain can’t be adjusted or edited.
Another important party that contributes to the smooth running of the blockchain is the miners. Miners refer to people, not software or computer commands.
The function of the miners is to make new blocks in the blockchain, and the process of creating these new blocks is called mining.
We explained earlier that when a block is generated, a nonce and hash are also generated to mark that block. The truth is, the process is not as easy as it might appear. When a new block is added to the chain, the new block’s hash refers to the hash of previous blocks.
It is key that the new block’s hash is relatable to the previous blocks, so it is the miner’s job to find the right nonce-hash combination for the block to be added to the chain. A correct combination is called the “golden nonce,” and the miner that finds it gets a financial compensation.
The nodes are the third concept that makes up the operation of the blockchain, and the nodes refer to the numerous electronic devices that hold blockchain copies.
Transactions carried out on the blockchain can’t be regulated by an individual or government because no centralized unit or entity has absolute power. The blockchain is decentralized over nodes, and each node contains a copy of the digital ledger.
The decentralized feature of the blockchain is why it is one of the safest means of transaction globally. You don’t need any third-party permission or authorization to carry out transactions on the blockchain’ all the authority belongs to you, and all you need is your digital signature.
The blocks that contain the data, the miners that find new blocks, and the nodes over which copies of the blockchain are scattered make up what we know as the decentralized blockchain technology.
Now that we’ve looked at what a blockchain is and how it works, we want to go further into the types of blockchains and how they operate.
Types of Blockchain
There are two major classifications for all blockchains – the permissioned blockchain and the permissionless blockchain. Permissionless blockchains grant anonymous access to any user, and there is no limit to the nodes they can access on the network.
On the other hand, permissioned blockchains are not as free as permissionless blockchains. Permissioned blockchains grant limited access to only certain nodes, and the rights of those nodes are also restrained.
Blockchains can also be further classified into four major categories:
Public blockchains are a type of permissionless blockchain, and they allow any user to join. The blockchain is called a public blockchain because anyone can become a node, and all the nodes have equal access to the blockchain.
A common example of a public blockchain is cryptocurrency. Many people mistake blockchain for the same thing as cryptocurrency, but this is inaccurate. A cryptocurrency is a form or an application of the blockchain.
The miners in public blockchains get rewarded with the cryptocurrency blockchain they are working on. The miners create a block by dealing with cryptographic equations for transactions.
Private (Managed) Blockchains
The private or managed blockchain is a type of permissioned blockchain, and the access given to the nodes is restricted. In a private blockchain, a single entity or body controls the running of the blockchain.
Unlike the public blockchain, where anybody can be a node, there is a huge restriction, and only those selected by the central authority can be the nodes. Private or managed blockchains can’t be called decentralized networks because there is limited access to the public, and there is a central figure that allocates access to nodes and the rights of each node in the network.
Private blockchains are faster to use than public blockchains because there is less traffic, and the number of nodes is also restricted. However, there is the issue of security when considering the managed blockchains, and they are more prone to bad actors.
Public blockchains face the same issues common to permissionless blockchains, they take a long time for transactions to load due to many nodes. However, transactions carried out on public blockchains are more secure.
Given that both the public and private blockchain have their drawbacks, two other types of blockchains have been developed.
The consortium Blockchain aims to deal with the limitations of the private blockchain. Where the private blockchain is a permissioned blockchain owned by a single entity, the consortium blockchain is controlled by a group of organizations.
The point of sharing control among a group of organizations is to decentralize the network further and reduce the security risk that comes with just one governor. However, it is not easy to establish a consortium blockchain because you will need to agree and cooperate with different organizations.
Asides from getting the organizations to agree, there is also the trust factor which is the main point of the blockchain. Before creating a consortium blockchain, there needs to be trust within the founding organizations.
Also, some organizations can be lacking in terms of the technology needed to implement the blockchain.
The hybrid blockchains use both the private and public blockchain systems to operate. The hybrid blockchain is owned by one entity, however, it is overseen by a public blockchain. The public blockchain is responsible for authorizing some transactions, and it reduces the risk of fraud or bad actors.
What Is a Blockchain Used For?
There are numerous applications of blockchains, and we know the common ones like cryptocurrency, but there are several other ways that the blockchain can be used.
Banking and Finance
Banks are starting to incorporate blockchain into their method of operation because it is faster and requires less personnel to operate. Financial institutions can’t be open all the hours of the day and all the days of the week, and there are times when you need to make a transaction, but your bank is not available.
With the use of blockchain in financial institutions, there will be no limit to the number of transactions you can perform and the time you can perform them. The blockchain doesn’t have a closing time or holidays, and it is always working.
The time it takes for your transaction to process via the blockchain is when it takes for a block containing your transaction to be added to the blockchain.
Cryptocurrency is the common application of blockchain that immediately comes to mind. Cryptocurrency can also be the greatest accomplishment of the blockchain so far.
Fiat currency is under the control of the government, and it is also susceptible to other factors. The value of your money is at the mercy of the economy, and your data is also at the mercy of your bank.
Cryptocurrency was formed to overcome the uncertainties and risks of dealing with fiat currency. Cryptocurrency is a digital currency that uses the blockchain as a foundation for operation.
With cryptocurrency, you are no longer at the mercy of your government or economy. Also, transacting with crypto removes the need for a third party or bank, and all transactions are carried out in real-time over nodes.
Blockchain currencies are greatly encouraged because they are safer and faster.
Some healthcare institutions have incorporated the use of blockchain in their record keeping. You can use blockchain for other things asides from finances.
Medical records of patients are stored in a blockchain, and private keys are issued to qualified individuals to access the blockchain.
Other ways blockchains are used include voting, supply chains, smart contracts, and property records.
What Is Blockchain vs Bitcoin?
Blockchain technology can be traced back to 1991 when Stuart Haber and W. Scott Stornetta created it. Many people mistake Bitcoin and blockchain because Bitcoin was among the first blockchain applications.
While Bitcoin uses the blockchain for its operation, it is wrong to say that the blockchain is limited to Bitcoin. Several other cryptocurrencies use the blockchain as a foundation.
Can You Delete a Blockchain?
You can’t delete a blockchain, which is one reason why it is a trusted form of transaction. Once a block is added to the chain, it is irreversible, and the transaction is there for all the nodes to see.
How To Delete Blockchain Account Permanently on Blockchain.com Exchange?
Before you can delete your account permanently, you need to empty the account. If your balance in the account is not $0, you won’t be able to close that account.
Once you’ve moved your assets out of the account, you can send a request to close the account.
What to Do if My Blockchain.com Account Is Hacked?
If you notice anything strange with your blockchain exchange account, transfer all your funds out of that account as soon as possible into another secure location. After moving all your assets, report the account to your platform and block that account.
Blockchain Exchange support gives you all you need to know about the blockchain, managing your wallet, exchanges, and more.
There are several things to learn about blockchain and its potential uses. We’ve looked at some things regarding the blockchain, and we have tried to shed some light on different aspects.
We’ve also looked at how to delete a blockchain account and what to do if you feel your account has been hacked. There are other technological advancements that you can learn about, and we welcome you to join us for more.