Updated: Nov 28
Author: Yaprak Selin Keskin
Date of publication: 22/07/2023
Blockchain is an innovative database mechanism that facilitates transparent information sharing across the entire corporate network. In particular, a blockchain database stores information in blocks associated with a single chain. This data is chronologically consistent because you cannot delete or modify a thread without consensus on the network.
Moreover, blockchain technology enables the creation of an unchangeable record. This can be utilized for tracking orders, payments, accounts, and various other transactions. What’s more, the system has built-in mechanisms that prevent unauthorized recording of events and create consistency in viewing these events together.
Why is blockchain technology important?
Blockchain alleviates these issues by creating a decentralized, tamper-proof system where transactions can be recorded. In a real sales scenario, the blockchain creates a ledger for each buyer and seller. Each transaction requires confirmation from both parties and is instantly updated in real-time on their respective ledgers. The isolation of past transactions will result in the corruption of the entire ledger. Therefore, these features of blockchain technology have led to the use of this technology in various industries. They have also contributed to the emergence of digital currencies such as Bitcoin.
How does blockchain work?
When blockchain data is processed or modified, the record is stored in a "block" along with the records of other transactions. The stored transactions are encrypted using unique and immutable hashes generated by algorithms like SHA-256. However, new data blocks don’t replace the old ones; they are collected to enable tracking of changes. Since all transactions are encrypted, records are secured, allowing the network to recognize and reject any alterations made to the ledger.
Blockchain: Immutable Data Chain & Consensus Mechanisms
Encrypted data blocks are securely linked together, storing transactions in a sequential manner to establish an unalterable audit trail. New data requires verification and approval by nodes through consensus mechanisms. Upon consensus, a new block is added to the chain, and all nodes update to match the blockchain ledger.
How can businesses benefit from blockchain?
Studies indicate that blockchain and distributed ledger technologies (DLTs) have the potential to unlock novel prospects for enterprises. This includes mitigating risks and cutting down compliance expenses. As a result, it enables more economical transactions, facilitating automated and secure contract execution. As a result, this leads to better network visibility.
Therefore, blockchain encompasses benefits such as risk reduction and decreased compliance costs. What's more, it provides efficient transactions and automated and secure contract fulfillment.