{"id":171026,"date":"2023-06-23T06:05:46","date_gmt":"2023-06-23T13:05:46","guid":{"rendered":"https:\/\/www.mcafee.com\/blogs\/?p=171026"},"modified":"2024-11-19T07:46:25","modified_gmt":"2024-11-19T15:46:25","slug":"blockchain-basics-whats-blockchain-technology-and-how-might-it-change-our-lives","status":"publish","type":"post","link":"https:\/\/www.mcafee.com\/blogs\/internet-security\/blockchain-basics-whats-blockchain-technology-and-how-might-it-change-our-lives\/","title":{"rendered":"Blockchain Basics: What\u2019s Blockchain Technology and How Might It Change Our Lives?"},"content":{"rendered":"

What\u2019s blockchain technology? The term gets bandied about often enough, but it doesn\u2019t always get the explanation it deserves.<\/span>\u00a0<\/span><\/p>\n

Understanding the basics of blockchain can help you understand several of the big changes that are taking place online. It\u2019s the foundational technology that underpins cryptocurrency and NFTs (non-fungible tokens), yet it has several other emerging applications as well.<\/span>\u00a0<\/span><\/p>\n

In all, gaining a sense of how blockchain technology works will give you a further sense as to how it may eventually shape the way you go about your day.<\/span>\u00a0<\/span><\/p>\n

Blockchain technology holds great potential because of the unique, decentralized way it handles data\u2014which marks the first step in understanding how it works.<\/span>\u00a0<\/span><\/p>\n

How blockchains work<\/span><\/b>\u00a0<\/span><\/h2>\n

An easy way to visualize how a blockchain works is with an old-fashioned ledger. Each ledger entry is a link in a \u201cchain.\u201d Within each chain is a unique identifier known as a hash and a block of data associated with it. Over time, chains get added, which updates the hash as new blocks of data are added to the chain.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>A simplified example of a blockchain storing recipe instructions. The Previous Hash and Stuff (data) fields generate the Hash field. This Hash becomes part of the next record.<\/span><\/i>\u00a0<\/span><\/p>\n

Yet one of the most important aspects of blockchain technology is this\u2014it\u2019s decentralized. Dozens, hundreds, thousands, or more participants in the blockchain track and validate the transactions associated with it.\u00a0<\/span>\u00a0<\/span><\/p>\n

Each blockchain<\/span> entry gets validated through consensus, where individual participants on a blockchain network must all \u201cagree\u201d that the data in each entry is correct. Participants in the blockchain network can arrive at consensus through several models, yet commonly they use cryptographic calculations to validate an update to the chain.\u00a0<\/span>\u00a0<\/span><\/p>\n

In this way, blockchain technology removes the need for a central authority to oversee a transaction, such as a bank. Put <\/span>simply<\/span>, blockchain gets rid of the <\/span>go-between<\/span>. And it makes transactions more anonymous as a result.<\/span>\u00a0<\/span><\/p>\n

Participants in a blockchain network receive a small amount of cryptocurrency per transaction as a reward for their efforts. Enter the notion of crypto mining, where some miners set up large-scale farms of powerful, specialized computers that participate in blockchain networks.<\/span>\u00a0<\/span><\/p>\n

Blockchains come in public and private forms. Public is just as it sounds, where anyone can participate in the blockchain. They can read, write, or validate data in the blockchain. Private blockchains are invite-only in nature and can establish rules about who can alter the blockchain.\u00a0<\/span>\u00a0<\/span><\/p>\n

Many blockchain ledger entries record financial transactions associated with cryptocurrency. However, ledger entries can contain any type of data. One can just as easily store documents, images, log files, or other items in a blockchain. Even decentralized programs, also known as smart contracts, can be stored.\u00a0<\/span>\u00a0<\/span><\/p>\n

In all, there\u2019s much more to blockchain technology than just cryptocurrency.<\/span>\u00a0<\/span><\/p>\n

How are blockchains used? Real-world applications of blockchain.<\/span><\/b>\u00a0<\/span><\/h2>\n

First and foremost, blockchain technology is at the heart of cryptocurrency. Wherever cryptocurrency is bought, spent, or exchanged, the blockchain is there to facilitate the transaction. However, we can point to several new and emerging applications as well, including:<\/span>\u00a0<\/span><\/p>\n