The word Blockchain is the combination of two words. Block and Chain. As the name suggest, blockchain is a chain of blocks. But this is not where the definition of blockchain ends. The concept behind blockchain is wider and people believing in blockchain say that it is the future. It is said that Blockchain will do to financial system what internet did to media, what email did to physical post and what smartphones did to landline telephones etc. There can be many examples given.
Let us take a look at an example. Suppose you want to send money to your relative who is settled in Canada. You are sitting here in India. Now when you transfer money from your Indian account to his/her Canadian account, it does not process immediately. It takes considerable amount of time. Also bank charges lots of fees to settle this transaction. Bank plays the role of middleman here. Unless and until bank verifies the transaction, it remains in pending status. This is called centralized system where banks control the transaction.
Blockchain is the technology which removes the need of middleman here and creates a decentralized system which is public and open to all. Blockchain works in peer to peer network. In the above example, let us consider that the transaction is done with the help of blockchain. As soon as the transaction is made, it is stored on the blockchain. Then everyone on the peer to peer network has to verify the transaction and provide their own consensus. This is called as node consensus. This process is also known as proof of work. Once all the nodes verify the transaction, block is added to the blockchain and transaction gets completed within no time.
Here if someone changes the data on the block or tampers with the block data, everyone on the network gets notified about it and they reject the block. So it is highly impossible to play with the block data hence blockchain is highly secured. Proof of work is something which makes blockchain more reliable and secured.
As in the traditional transaction using the bank, it takes considerable amount of time e.g. 2-3 days in case of international transfer, banks charge huge remittance charges as it provides this service. But in case of blockchain the transaction gets completed within 10 minutes even if it is international, very nominal fee is charged by peer to peer network and the network secures the transaction.
So blockchain provides below features:
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