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If you are closely related to banking and finance, then you might have come across a word blockchain in the recent decade. Most of the folks get confused with its functioning when they try to take out a literal meaning out of the name blockchain, but here the name block refers to the digital data and the chain refers to the storage of information in public database. In finance terms it is decentralized, distributed, public ledger. These complex words make the technology intricate for common folks but it can be simply explained with the help of an example of Google document. When you create a Google document you don’t copy or transfer the information, instead keep it decentralized and distributed so allowed folks can access it from anywhere.
Likely, blockchain is a piece of digital information with three distinguished parts which includes:
- Information about the transactions made, like amount in dollar, date, time
- Along with your transaction details, blockchain also keep a record of all other participants involved in that transaction
- Block store information (every transaction made on digital media has distinguished block store)
Working of blockchain:
To understand the working of blockchain, you need to understand its concepts. It comprises three basic elements, blocks, nodes, and miners. To understand these elements continue reading:
Block again is separated into three different parts. One is data which has to be stored, second is the nonce which is a 32 bit number and is generated every time you create a block. Generation of nonce then calls for the hash generation which is a 256 bit number and starts with huge number of zeros.
Whenever a block is created, it stores a data with a generation of nonce and hash which gets binded forever till it is mined.
Mining is a process of generating a new block on the chain and it has to undergo a complex procedure as it needs to find a unique nonce and hash combination that fits the chain. A single change in a block follows a mining in entire chain to keep the current block uninterrupted and distinguished from others.
Blockchain is completely based on the decentralization of data and there node plays an important role. The blocks created in the miners are decentralized with the help of nodes in the network which can be any kind of electronic device.