The blockchain refers to a distributed database that allows for secure, transparent and tamper-proof transactions. This security and transparency have made the blockchain so popular and have led to it being labelled as one of the most essential technologies. But what are the three pillars of blockchain?
The first pillar is decentralization.
The blockchain is a decentralized platform, which means no central authority or governing body. This decentralization gives users more control over their data and allows for a more democratic system, which is the appeal of cryptocurrency markets. These markets aren’t controlled by a central banking authority which allows end-users to buy, trade and use crypto peer-to-peer.
What does this mean practically? It means that no one, company or government-run, the network. The users run it on the web who all have a copy of the ledger (record all transactions). This makes it decentralized.
The second pillar is security.
The blockchain uses cryptography to secure its transactions. This means that each transaction is unique and can not be tampered with. This makes the blockchain a very secure platform which is why it is often used for financial transactions.
The blockchain is a secure platform because of its decentralized nature. There is no central authority that controls the network. Instead, it’s run by users within the network who have a copy of the ledger (the record of all transactions). This decentralization makes it very difficult for anyone to tamper with the data.
The third pillar is transparency.
The blockchain is a transparent platform which means that all transactions are public and can be viewed by anyone. This transparency allows for more accountability and helps to prevent fraud.
All transactions are public also makes it difficult for anyone to tamper with the data. All of these factors make the blockchain a very secure platform which is why it is often used for financial transactions.
How does the blockchain function?
The key to understanding how blockchain works are understanding the concept of a distributed ledger. A distributed ledger is a database spread across a network of computers. This means that there is no central copy of the database.
Each computer on the network has its copy of the database, and these copies are all kept in sync with each other. This is what allows the blockchain to be decentralized.
There is no central copy of the database also makes it very secure. If one computer on the network is hacked, the other computers will still have their copy of the database.
What are the benefits of blockchain?
The benefits of blockchain are many and varied. Some of the most important benefits are:
- Decentralization: As we have seen, the blockchain is a decentralized platform that gives users more control over their data.
- Security: The blockchain is a secure platform which makes it ideal for financial transactions.
- Transparency: The blockchain is a transparent platform that allows for more accountability and helps to prevent fraud.
These are just some of why the blockchain is such an important technology. It is secure, transparent and decentralized, making it ideal for a wide range of applications. If you’re looking to get involved in the blockchain, make sure you understand these three pillars.