What is Blockchain and its benefits?

Blockchain technology has formed the backbone of a new type of internet—one that can be utilized but cannot be copied (subject to the permission of distributing digital information). Let’s try to understand this concept in simpler terms.

For instance, suppose a gentleman sends 5,000 Taka to his father in the village through traditional banking services. If we analyze this transaction system, the gentleman is the first party, his father is the second party, and the banking system acts as the third party. As a result, almost all activities, including the transaction itself, are completed through this banking system. This means that whatever facilities are required to transfer money between two individuals are entirely provided by the bank through its service—which is what we refer to as the banking system.

If you can understand the banking system mentioned above, understanding blockchain will be easy for you. You can compare the banking system to blockchain, but the blockchain system is not like the banking system at all. Let’s make this a bit clearer. Suppose the gentleman mentioned above wants to send money to 100 friends, and these individuals are interconnected with each other, transacting money through a shared medium.

In the language of blockchain, this process of being interconnected and transferring money together is what we call an Open Ledger. Because it is open, the entire blockchain system is kept Decentralized. Notice the interconnection among these 100 people—since they are all connected to one another, everyone has visibility into each other's accounts. This is where the real charm of blockchain lies, as every connected account updates automatically with each transaction. This automated mechanism is the Distributed Open Ledger, also known as decentralized.

However, you might have a doubt here—for example, someone could send 500 Taka and falsely claim they sent 5,000 Taka. This is why the entire transaction system must be validated and verified, and those who perform this verification work are what we call Miners.

Origin of Blockchain
The initial work on blockchain using cryptographic technology began around 1991. However, because it did not achieve tangible success, its practical use could not expand. Its true application was unlocked in 2008 by an individual named Satoshi Nakamoto, who introduced blockchain technology for transactions of cryptocurrency, namely Bitcoin. As a result, worldwide awareness regarding the use of blockchain continues to grow today.

What is Blockchain?
Blockchain = Block + Chain. In this system, each block acts as an individual account where every transaction management is conducted in the form of a chain. Every block ensures high-level security through hashing, as a result of which no one can tamper with it.

Blockchain is an English term that literally translates to a "chain of blocks." This method or technology is primarily a transactional system through which funds can be transferred directly from one person to another. Blockchain technology is among the most dynamic and secure systems available, where no one can manipulate or alter transactions.

Since the journey of blockchain began successfully with the introduction of Bitcoin, understanding how Bitcoin transactions work makes it easy to grasp the core concept of blockchain. No single individual or institution controls blockchain technology. It is a completely decentralized system with no centralized authority; rather, everyone within the network collectively acts as its controller.

This technology is entirely immutable. When a transaction occurs in this system, a block is added to the blockchain and cannot be changed thereafter. The blocks align side by side in the chronological order of their creation. Each block knows which block precedes it, connecting one block seamlessly to the next. Consequently, even if one or hundreds of servers or computers fail simultaneously, the blockchain network remains unharmed.

Blockchain technology is a secure and open method for storing data. In this technology, information is stored across various blocks, sequentially linked in a chain. It provides an immutable digital ledger that is not only applicable to financial transactions, but can also record any operational data.

Blockchain is a distributed database that records every transaction among participating parties. Furthermore, each transaction is validated through the consensus of the majority within the system.