Introduction
Blockchain technology has been making waves in various industries, but what exactly is the underlying technology behind it?
Cryptographic Hash Functions
At the core of blockchain technology are cryptographic hash functions, which are algorithms that take input data and produce a fixed-size string of bytes.
- Examples: SHA-256, MD5
Decentralized P2P Network
Blockchain operates on a decentralized peer-to-peer network, where every participant (node) has a copy of the entire ledger.
Consensus Mechanisms
Consensus mechanisms are used to validate transactions and add them to the blockchain. Some popular ones include Proof of Work (PoW) and Proof of Stake (PoS).
- Case Study: Bitcoin’s PoW algorithm
Smart Contracts
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller directly written into lines of code.
- Example: Ethereum’s Turing-complete language
Immutable Ledger
Once a block is added to the blockchain, it cannot be altered or deleted. This immutability ensures trust and security.
Use Cases
Blockchain technology is being used in various industries, including finance, healthcare, supply chain, and more.
- Statistics: Global blockchain market expected to reach $39.7 billion by 2025
