Blockchain- The revolutionary technology impacting different industries miraculously was introduced in the markets with its very first modern application Bitcoin. Bitcoin is nothing but a form of digital currency (cryptocurrency) which can be used in the place of fiat money for trading. And the underlying technology behind the success of cryptocurrencies is termed Blockchain.
In the
simplest terms, Blockchain can be described as a data structure that holds
transactional records and while ensuring security, transparency, and
decentralization. You can also think of it as a chain of records stored in the
forms of blocks which are controlled by no single authority. A blockchain is a
distributed ledger that is completely open to any and everyone on the network.
Once information is stored on a blockchain, it is extremely difficult to change
or alter it.
Each
transaction on a blockchain is secured with a digital signature that proves its
authenticity. Due to the use of encryption and digital signatures, the data
stored on the blockchain is tamper-proof and cannot be changed.
Cryptography
is a method of developing techniques and protocols to prevent a third party
from accessing and gaining knowledge of the data from the private messages
during a communication process. Cryptography is also made up of two ancient Greek
terms, Kryptos and Graphein, the former term meaning “hidden” and the latter
being “to write”. There are several terms related to cryptography, which are
stated as follows:
Encryption: It is a process of plaintext (normal text) to a ciphertext (random sequence of bits).
Decryption: The inverse process of encryption, conversion of ciphertext to plaintext.
Cipher: The mathematical function, i.e. a cryptographic algorithm which is used to convert plaintext to ciphertext.
Key: A small amount of information is required to induce the output of the cryptographic algorithm.
Blockchain technology makes use of cryptography in multiple different ways – for wallets, transactions, security, and privacy-preserving protocols. Cryptography is an integral part of the inner-workings of blockchain technology. Public-key encryption serves as the basis for blockchain wallets and transactions, cryptographic hash functions provide the trait of immutability, and Merkle trees organize transactions while enabling Blockchains to be more efficient.
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