Cryptocurrencies like Bitcoin, Ethereum, and other altcoins are built on blockchain technology.

Bitcoin is a peer-to-peer electronic currency system made possible by blockchain technology. Users have total control over their account balances and transactions on the Bitcoin network. On a blockchain, transactions cannot be changed by a third party, unlike in traditional financial systems.

Blockchain has several applications outside of Bitcoin. Since its creation, the core technology of Bitcoin has been improved to find uses in numerous fields. Over the past year, it has been discovered that blockchain technology has applications in a variety of industries, including supply chain management and healthcare.

Properties of Blockchain Technology

In this section, we are going to look at the properties possessed by blockchain. The properties can be categorized into 3, namely:

  • Traceability
  • Immutability
  • Transparency

1. Traceability

Being able to trace anything means being able to determine both its provenance and its destination. This feature is helpful for keeping track of where the money originated from and what it was ultimately spent for. This is helpful for figuring out where things came from as well.

2. Immutability

Immutability means that whatever occurs on the blockchain remains on the blockchain. This is a very valuable attribute for establishing confidence inside a system. If the data cannot be modified, we have a better chance of accepting that what the network reported happened and that no third party interfered with the data.

3. Transparency

Several variables contribute to transparency. Most blockchains’ source code is open source and may be inspected by anybody interested in learning more about the network. In the case of Bitcoin, all transactions are visible to the public, increasing the capacity to audit and trust network activities. These elements add to the network’s transparency.

Blockchain is the backbone of Bitcoin

Bitcoin was created on October 31, 2008, and was released on January 3, 2009. The effort to figure out how to securely connect together transactions dates back to 1997, with roots in “HashCash,” a pre-bitcoin phenomenon. Bitcoin would not be conceivable without the Bitcoin founders finding out how to build a tamper-proof chain of transactions.

The Bitcoin blockchain is a collection of discrete blocks that include information on network transactions. Every computer on the planet has the same copy of each individual block. These machines comprise the Bitcoin Network and ensure the blockchain’s security and legitimacy.

The network’s transactions are chunked together into blocks and cryptographically linked together, therefore the blockchain has been an easy choice of words to explain the underlying technology underpinning Bitcoin and other cryptocurrencies.

Blockchain eliminates intermediary

Satoshi Nakamoto described a “peer-to-peer electric cash system” in the initial white paper that introduced Bitcoin. Peer-to-peer indicates that there is no requirement for a third party to authenticate network transactions.

Cash transactions function as a peer-to-peer payment mechanism. When utilizing cash, there is no need for a third party to handle the transaction between you and a business. The ability to eliminate the middleman in Internet transactions has the potential to disrupt a wide range of sectors. Making supply chains more efficient, for example, or worldwide financial transactions quicker and cheaper.

Can blockchain be hacked?

Blockchains are simply software created by people, and humans make mistakes. Having said that, the Bitcoin blockchain has been operational for more than a decade, with not a single successful attack on the network. Bitcoin’s creators have opted to make trade-offs with the software, preferring better security and trust over an efficient network capable of processing a worldwide load of transactions.

In the previous decade, there have been several attacks on blockchain networks. Hackers can either directly abuse the code or seize control of the network via the governance systems.

To hijack the Bitcoin network through governance, for example, you would need to control 51% of the network. This endeavor has been declared unfeasible since the Bitcoin network is so broadly spread that amassing that much computational power is practically impossible. Other blockchain networks, on the other hand, are substantially smaller and hence far more vulnerable to a 51% attack.