Blockchain - basics

A decentralized application is an application where the data required for processing is not owned by government or companies, but by individuals from different parts of the world, who get paid for lending their processing power to run those programs. 

Some of the main characteristics of a decentralized application include: 

• Data may not be owned by a single company or an organization. 
• Tamper proof: Once a transaction happens on a decentralized application, no one should be able to alter the data, and even if they do, it is not affected by that as many nodes does the processing. 
• Data cannot be controlled, censored by a company or country. 
• Data may not be limited to only monetary transactions, but can have any data such as ownership details. 
• No need to trust a single node in the decentralized application. 

So what is Blockchain?

Blockchain is a technology that helps developers build decentralized applications – It allows two people or thing who does not know each other to trust and make transactions with each other. 

Blockchain is a distributed database that contains shared record of transactions that cannot be censored, tampered with, erased or duplicated. It’s a new way to store and record transactions. These transactions can be certificate of ownership of an item, bank's financial transaction, person's will information etc.

This distributed database is collaboratively maintained by peers on the network, called nodes. A node is a machine where the validation & processing happens. Individual nodes verify the sender and the transaction and approve them. This removes the need for a third party to intermediate. 

These nodes are stored in public which means this is not owned by a country or an organization. Users lend their processing power to process these data, in turn get their incentive for their processing power. 

The transactions involved can be anything from certificate of ownership of an item, bank's financial transaction, person's will information etc. 

  

Blockchain can be thought of as a public ledger which holds all important transactions that is stored in a distributed way. You can do a lot more with the Blockchain than exchange value. Once a transaction appears on the Blockchain, it is impossible to deny that it has happened. Hence it cannot be censored, tampered with, erased or duplicated. It is a technology that fundamentally influences the way trade ownership and trust has been functioning. 

Blockchain works well even when some of the operators are dishonest, some nodes run slowly or tampered. 

We will look more on block chain applications in the next article.