In this article, we shall be discussing some important blockchain technology concepts you need to know. Make sure you read till the end to learn about these concepts.
Important Blockchain Technology Concept
The following are essential blockchain technology concepts you should know.
1. Bitcoin and Blockchain are not the same
Contrary to what many people assume, bitcoin and blockchain are not the same. Blockchain is the underlying technology upon which Bitcoin is built. The two terms are closely related but they are not the same.
Bitcoin was introduced in 2008 as a type of unregulated digital currency. It was created by the pseudonymous Satoshi Nakamoto. The ledger solution utilized to securely record Bitcoin transactions is known as a blockchain.
Blockchain facilitated the use of bitcoin since there was no government or bank involved to monitor the transactions. As a result, Bitcoin can be regarded as the first use case that leveraged blockchain technology.
The confusion between bitcoin and blockchain often arises because the two concepts were introduced at the same time.
2. Data stored on a blockchain is public
This is just partially right. Some public blockchains are open, while others are private and only accessible to specified users.
The type of blockchain needed will be determined by the use case. There are primarily three types of blockchains – private, public, and consortium blockchains. You can learn more about these different types of blockchain here.
3. Blockchain solutions have the same common denominator
The term "blockchain" is most commonly used to describe a ledger technology rather than a specific solution or product. A blockchain solution will share the same common denominators such as having some form of consensus mechanism and being distributed and supported by cryptography.
However, several blockchains come in private, public, or permissioned versions. Today, there are a lot of different protocols that are considered blockchains. These protocols can be categorized as distributed ledger technologies. Examples include Ethereum, Fabric from IBM, Ripple, and Corda from R3.
Some of these protocols are similar, while others are vastly different. Each blockchain solution will have distinct benefits and drawbacks depending on the different use cases and applications.
4. Information visible on the blockchain depends on different use cases
Because the distributed ledger is public, many people believe that all of their transaction data and information posted on the blockchain are public. However, this is not the case. Visibility varies depending on the use case and technology deployed. For example, all transactions between businesses are private and only visible to those with the right authorization.
When a company leverages blockchain to distribute data to its suppliers, it does not mean that its competitors can see who their suppliers are or what they're buying. Also, the suppliers cannot see the data of other suppliers. It's all kept private and secure; the suppliers can only see the information the buyer has permitted them to see.
While some transactional information can be made public, the amount of the transaction and a hash are just what is stored on the distributed ledger. The hash is a code that is generated by running the real transaction details through a cryptographic method. As a result, getting access to more information about the transaction is impossible.
In this guide, we’ve been able to cover some basic blockchain technology concepts. You can learn about some more blockchain concepts here.
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