When blockchain technology and cryptocurrency first hit the market in 2009, most people opted to stay away because they did not understand them. Again, the rapid uptake and use of crypto coins in the dark world fueled the fear they would not be good. But it was wrong. Blockchain is the next-generation technology with diverse applications, from financial to supply chain networks. Let’s put it this way: no matter the industry of choice, there is a way blockchain and cryptocurrencies can help to make it better.
Common Characteristics of Blockchain that You Need to Know
The most notable characteristic of blockchain networks is that they are distributed. This means that there is no central authority responsible for their administration. Unlike banks that work with a clear leadership hierarchy that defines how they run, blockchains use consensus mechanisms for governance and confirming transactions. This implies that for decisions that have major impacts on the network, users/ nodes on the network have to vote on them.
For example, the nodes on the Ethereum network had to vote to approve the ongoing shift from proof of work (PoP) consensus protocol to proof of stake (PoS) consensus system. Here are other characteristics of blockchain technology that you need to know.
- They are Immutable
This is the most exciting characteristic of blockchain technology. Immutability means that the blockchain is permanent, unchangeable, and incorruptible. So, let’s see how this is achieved.
This is made possible by the decentralized design of blockchain networks. The decentralized design means that the blockchain relies on the nodes spread in its network, and the need for changes would require a majority of them to agree. This is very difficult. Even when sending funds, the majority of nodes check to confirm it is valid before details can be added to the next blockchain. This is very useful in promoting transparency. So, whether you are using the blockchain for running business transactions, storing personal information, or sending money, rest assured that information will not be corrupted and can always be checked.
- Highly Secure
Removing the centralized authority means that there is no person or entity that can change the details of the network. The encryption (cryptography) used on the decentralized network provides another layer of security to protect users’ coins. Therefore, you are sure that no one can easily access your information about coins on the blockchain.
To reduce the risk of your coins getting stolen, you need to also ensure they are stored safely. This means not revealing the private keys to third parties. Again, it is advisable to limit the time you store cryptocurrencies in exchanges because they are considered easy targets for hackers for holding large numbers of coins. Indeed, it will be a good idea to only use highly secure sites, such as hi.com, when converting one crypto to another or crypto to fiat currency.
- Blockchains Rely on Consensus
All blockchains are designed to use consensus algorithms. This system is cleverly engineered to help with the governance of the networks. The consensus is a system of decision-making where the nodes spread in the network come into an agreement quickly to validate a transaction. At any moment, millions of nodes are reviewing the information presented in various transactions and validating or declining requests. The same method is used when making important decisions about blockchain networks.
These attributes of blockchain networks we have listed above have made them the ultimate go-to technologies, especially for sending money with no disruptions. Therefore, if you have been thinking of using blockchain technology for various purposes, such as borrowing money and making direct purchases, it will be an excellent idea. Visit hi.com to see the different applications.