Have you ever wondered what exactly blockchain is and how it works? It seems to be a buzzword that is thrown around a lot these days, but many people are still unsure of its true meaning and potential.
Blockchain technology has gained significant attention in recent years, particularly with the rise of cryptocurrencies like Bitcoin. However, its applications go far beyond just digital currencies. Understanding the concept of blockchain is crucial as it has the potential to disrupt various industries and revolutionize the way we conduct transactions and store data.
Hi, I’m Zifa. As a long-time crypto enthusiast and writer, I’ve crafted this article to provide you with a clear understanding of blockchain. We’ll go over the basics, discuss its benefits, and touch on some challenges. Let’s dive in!
What Is Blockchain Technology?
Blockchain technology is a decentralized ledger system that uses a distributed network and cryptographic hashing to securely record and verify transactions.
By providing a secure, immutable, and distributed ledger shared among a network of computers, blockchains are designed to make data secure and increasingly difficult to modify.
These distributed ledgers are the backbone of cryptocurrencies such as Bitcoin, but they have gone far beyond their original use case to form the foundation for DeFi applications, NFTs, and smart contracts.
What Is a Blockchain in Simple Terms?
A blockchain is like a shared database or ledger where information is stored in blocks. Let me explain the concept by comparing it to a more casual tool—Google Docs.
At first glance, blockchain and Google Docs might seem worlds apart, one being a cutting-edge technology underpinning cryptocurrencies and the other being a popular online word-processing tool. However, when you look closer, there are some intriguing parallels:
Real-time Collaboration and Transparency: Just as multiple users can access, view, and edit a Google Docs document simultaneously, participants in a blockchain network can see transactions being added in real time. This transparency ensures that everyone is on the same page, quite literally in the case of Google Docs and figuratively for blockchain.
Decentralized Access: Traditional word processors save documents on a single computer. If you wanted someone else to view or edit, you’d have to send them a copy. This is similar to centralized databases or systems. Google Docs, on the other hand, is cloud-based, allowing multiple users to have access without sending copies back and forth. Similarly, blockchain operates on a decentralized model. Instead of a central authority holding the master copy, every participant (or node) on the network has a complete copy of the blockchain.
Immutable History: In Google Docs, there’s a Version History feature. It allows users to view past document versions and see what changes were made, when, and by whom. Blockchain operates on a similar principle of immutability. Once a transaction is added to a block and that block is added to the chain, it’s nearly impossible to alter that information without changing every subsequent block, which would require the consensus of the majority of the network. This ensures a permanent and tamper-evident record of transactions.
Consensus and Validation: In Google Docs, if two users are editing the same line simultaneously, the software might flag a conflict, requiring users to review and decide on the final version. Blockchain also operates on consensus. Before a transaction is added, network participants (or at least the majority, depending on the blockchain type) must validate and agree on its legitimacy.
Security through Transparency: One might think that having data visible to many would be a security concern. However, both Google Docs and blockchain turn this transparency into a security feature. In Google Docs, real-time visibility means unauthorized changes can be quickly spotted. In blockchain, the decentralized and transparent nature makes malicious tampering evident since altering data would mean changing it on the majority of nodes, which is computationally impractical.
Why Is Blockchain Important?
Blockchain’s significance stems from its transformative potential across industries. It offers unparalleled transparency with an unchangeable ledger, enhancing trust in sectors like banking, supply chain, and healthcare.
How Are Blockchains Used?
Blockchains find many applications across different industries and sectors.
Financial Transactions: Blockchain’s decentralized and transparent nature offers a secure way to conduct financial transactions, diminishing the involvement of intermediaries and fraud risks.
Healthcare: Blockchain can revolutionize medical record management. It securely stores patient data, supporting privacy and facilitating efficient sharing among healthcare providers. I have previously posted an article exploring blockchain implementations in healthcare.
Banking and Finance: Blockchain accelerates interbank payments by bypassing intermediaries. Transactions settle within minutes, and transparency minimizes fraud risks. Institutions like the Singapore Exchange Limited (SGX) have adopted blockchain to streamline business processes and cut down on costs and time. Learn more about blockchain in banking in this article.
Currency: Blockchain offers a stable financial system by lessening risks and transaction fees.
Property Records: Blockchain can modernize property record management. It ensures accurate, transparent property rights recording, decreasing disputes and fraud. Digital property records on blockchain also keep the risk of loss or destruction at bay.
Smart Contracts: These are programmed agreements automatically executed based on set terms. Smart contracts are featured on platforms like Ethereum. They streamline asset transfers, making transparent and tamper-proof transactions a reality.
Supply Chains: Blockchain’s ability to track product journeys from source to destination ensures quality control and boosts brand trust. It also simplifies processes, reducing paperwork and enhancing efficiency. I wrote about blockchain in supply chain management in this article.
Voting: Blockchain can enhance voting integrity by preventing fraudulent transactions. Each vote becomes an immutable record, ensuring transparency and trust in election results.
The potential applications of blockchains are vast and continue to expand as more industries recognize the benefits and potential of this innovative technology.
What Are the Key Components of Blockchain Technology?
At its core, blockchain consists of three main components: cryptographic keys, a network of computers, and a shared public ledger.
Cryptographic keys secure and verify transactions: only authorized parties can access and modify the data.
The network of computers, also known as nodes, works together to validate and record transactions on the blockchain.
Lastly, the blockchain ledger is a digital database that stores all transaction data in a chronological and immutable manner.
These three components, working together, create a secure and transparent system that can be used for a wide range of applications, from financial transactions to supply chain management and even healthcare records.
What Is a Block?
A block, in the context of blockchain technology, can be seen as a container that holds a set of data. It is the fundamental building block of a blockchain network.
A block consists of three basic elements: the data it holds, the nonce, and the hash. The data within a block can vary depending on the specific blockchain application, but it typically includes transactional information or any relevant data that needs to be stored securely.
The nonce, short for “number only used once,” is a random number generated during the process of mining. Its purpose is to add additional complexity to the block header hash generation process.
The hash is a unique fingerprint that represents the contents of the block. It is generated by running the block’s data and nonce through a cryptographic hashing algorithm. This hash acts as a digital signature of the block, ensuring its integrity and providing a way to link it to the previous block in the blockchain.
The combination of the data, nonce, and hash in a block creates an immutable relationship. Any change to the data or the nonce would result in a completely different hash, making it easy to detect any tampering attempts. This immutability guarantees the security and integrity of the blockchain network.
In summary, a block in a blockchain network is a container that holds data. It consists of the data itself, a nonce, and a hash. The immutability of the data, due to its tie to the nonce and hash, provides the foundation for the security and reliability of blockchain technology.
What Is Public Key Cryptography?
Public key cryptography is a fundamental component of blockchain technology, for it maintains the security and integrity of transactions. It involves the use of two keys: a public key, which is openly shared, and a private key, which is kept secret.
In the context of blockchain, when a transaction is created, the sender uses their private key to sign it and generate a digital signature. This signature is then verified via the sender’s public key. Only the corresponding private key can be used to create a valid signature, making it virtually impossible for anyone else to tamper with the transaction.
The transaction receiver uses the sender’s public key to verify the operation. This process ensures that the transaction has not been altered or manipulated during the transmission. If the verification process is successful, the transaction is considered valid and added to the blockchain.
Public key cryptography provides a high level of security in blockchain networks as it allows users to verify data integrity without revealing their private keys. It also enables secure digital identities, making it possible for participants to maintain their privacy while still participating in the network.
What Is a Miner in Blockchain?
A miner in the blockchain is an essential participant in creating new blocks and maintaining the integrity of the decentralized network. Miners solve complex mathematical problems to validate and add new transactions to the blockchain.
When a new block of transactions needs to be added to the blockchain, miners compete to solve a mathematical puzzle. This puzzle requires significant computational power and involves finding a “golden nonce” — a random number that, when hashed with the block’s data, produces a hash that meets specific criteria set by the blockchain protocol. Finding this golden nonce requires trial and error, with miners attempting multiple combinations until they find the correct one.
The difficulty in manipulating blockchain technology lies in the sheer computational power required to solve these complex math problems. As the network grows, the difficulty of the puzzles increases, making it even more challenging to manipulate the blockchain.
Once a miner successfully finds the golden nonce and solves the puzzle, they broadcast the new block to the network, and other nodes validate and add it to their copies of the blockchain. As a reward for their efforts and to incentivize continued mining, the miner who successfully mines a block is usually awarded a certain amount of digital currency, such as Bitcoin.
In summary, miners play a crucial role in maintaining the blockchain network’s integrity by creating new blocks through solving complex math problems. The difficulty in manipulating the blockchain and the rewards received by miners ensure the security and stability of the blockchain system.
What Is a Nonce in Blockchain?
Miners randomly generate 64-bit hexadecimal numbers — nonces (numbers only used once) — as fast as possible. In Bitcoin mining, a nonce is 32 bits, and a hash is 256 bits. The first miner, who generates a nonce equal to the target hash, gets a reward.
As mentioned above, blockchain is a great database that stores data in the form of blocks, meaning the system is structured. Each block keeps a certain amount of information. The capacity of one block in the Bitcoin network is 1,000,000 bytes, or 1 megabyte. One BTC block also contains its own hash and the hash of the previous block. Bitcoin miners generate one block every ten minutes. The Bitcoin network is capable of producing around seven transactions per second.
What Is Decentralization in Blockchain?
Decentralization is a key concept in blockchain technology because of what it means for its integrity and trustworthiness. It refers to the distribution of power, decision-making, and data across a network of participants rather than relying on a centralized authority. This decentralization provides several important benefits.
In the context of blockchain, decentralization is achieved through a distributed ledger, which acts as a transparent and tamper-proof record of all transactions. The ledger is not stored in a single location but is replicated across multiple network nodes, creating redundancy. Because of this redundancy, even if one node fails or is compromised, the data remains accessible, and the network continues to operate seamlessly.
Another crucial component of decentralization is cryptographic proof. Each transaction added to the blockchain is encrypted and linked to the previous transaction using cryptographic algorithms. This contributes to the immutability of the data, preventing any unauthorized changes or tampering.
Decentralization brings about a higher level of trust and integrity in the system. Since there is no single point of control, it becomes extremely difficult for malicious actors to manipulate the data or carry out fraudulent activities. This creates a heightened level of trust among participants, enabling secure and transparent transactions.
Furthermore, decentralization allows for scalability as the network can easily expand by adding more nodes. This scalability removes the limitations of traditional centralized systems, making blockchain technology suitable for a wide range of applications beyond financial transactions, such as supply chain management and medical records.
What Are Layers in Blockchain?
There is the concept of building multiple layers of blockchains — that is, blockchain layers — on top of each other, each with its own set of consensus mechanisms and functionality. This approach allows for increased scalability and flexibility in blockchain networks.
At the base layer, the foundational blockchain provides the core infrastructure and security for the entire system. It handles the validation and confirmation of transactions using a consensus mechanism like proof of work or proof of stake. This layer maintains the immutability and integrity of the data stored on the blockchain.
On top of the base layer, additional layers can be built to enhance the functionality of the blockchain network. These layers can be customized with specific features and consensus mechanisms to suit different applications or industries. For example, the Lightning Network is a second-layer solution built on top of the Bitcoin blockchain. It enables faster and cheaper transactions by creating payment channels between participants, reducing the load on the main blockchain.
Since blockchain layers distribute the workload across multiple layers and consensus mechanisms, their usage improves scalability. This allows for increased transaction throughput and boosted network performance.
How Does Blockchain Work?
Let’s delve into the underlying mechanisms of blockchain technology and explore its key processes.
Step 1 – Initiate the Transaction
A blockchain transaction is a record of an exchange of assets between two or more parties in a distributed ledger. It can be used for many different types of exchanges, such as real-world currency, valuable goods, services, commodities, and even the transfer of property titles. The details recorded in the data block include who was involved in the transaction (send/receive), and when and where it occurred.
This information can provide a comprehensive history of all transactions within the network, which can be extremely valuable for understanding how assets are exchanged between various participants. Additionally, unique identifiers like timestamps are used to prevent later modification or misuse. As a result, blockchain transactions are immutable and secure from illegitimate actors looking to manipulate or steal data or assets from the network.
Step 2 – Gain Consensus
In a distributed blockchain network, gaining consensus is a critical step to ensure that recorded transactions are valid and accepted by all participants. Consensus refers to the collective agreement among network participants on the validity and order of transactions within the blockchain.
To gain consensus, network participants must agree on the accuracy and integrity of recorded transactions. This agreement is achieved through a consensus algorithm or protocol that establishes the rules for validating and confirming transactions.
The specific rules of agreement can vary depending on the type of network, such as a public or private blockchain, and are typically established at the beginning. For example, in a public blockchain like Bitcoin, consensus is achieved through the proof-of-work algorithm, where miners compete to solve complex mathematical puzzles.
Once a group of transactions is selected to be added to the block, the miners validate the transactions according to the agreed-upon rules. If the majority of miners agree that the transactions are valid, consensus is reached, and the block is linked.
Since participants must reach a mutual agreement on the validity and order of transactions, gaining consensus guarantees that the blockchain remains secure and trustworthy. This distributed consensus mechanism eliminates the need for a central authority and allows for a transparent and decentralized network.
What is proof of work and how is it different from proof of stake?
Proof of work (PoW) and proof of stake (PoS) are consensus mechanisms in blockchains.
To validate blocks and earn rewards, PoW requires miners to solve cryptographic puzzles and, for that purpose, consumes significant energy.
PoS, however, lets users “stake” cryptocurrency to validate blocks based on the amount they hold, trimming down energy use. While both secure blockchains, PoW is energy-intensive, whereas PoS is more eco-friendly and cost-efficient. In essence, PoW relies on puzzle-solving, and PoS on coin ownership and staking.
Step 3 – Link the Blocks
In blockchain technology, the process of linking blocks is vital for maintaining the integrity and security of recorded transactions. Transactions are written into blocks, which are then connected to form a chain known as the blockchain.
Once a group of transactions has been validated and consensus has been reached, they are recorded into a new block. Each block contains a unique identifier called a cryptographic hash, which is generated through a complex mathematical algorithm. This hash serves as a digital fingerprint of the block, representing the data it contains.
The cryptographic hash plays a crucial role in chaining the blocks together. When a new block is created, it contains the hash of the previous block, thus linking these blocks directly and forming a chain. Any attempt to modify the data within a block would result in a change in its hash value. This, in turn, would break the chain of hashes, alerting the network to potential data tampering.
Blockchain technology enhances the verification process through cryptographic hashes. Each block’s hash serves as a secure reference, effectively creating an immutable record of transactions. This not only strengthens the security of the blockchain but also increases trust in the system by providing a reliable method for detecting any unauthorized changes to the data.
Step 4 – Share the Ledger
In a blockchain network, the latest copy of the central ledger is distributed to all participants to support transparency and consistency among them. This process of sharing the ledger is one of the fundamental aspects of blockchain technology.
The central ledger, which contains all the recorded transactions, is shared across the distributed blockchain network. Once a new block is added to the chain, it is immediately delivered to all participants in the network. Thanks to this mechanism, every participant has access to the most up-to-date version of the ledger.
Sharing the ledger is significant because it allows all participants to have a synchronized view of the transactions. Besides, it promotes transparency because everyone can independently verify and validate transactions recorded on the blockchain. This transparency mitigates the need for trust in centralized authorities, as participants can rely on the shared ledger for accurate and reliable information.
Furthermore, sharing the ledger enhances consistency among participants. Since everyone has the same copy, there is no room for discrepancies or conflicting versions. Any changes or updates made to the ledger are immediately reflected across the entire network, maintaining a consistent and unified view of the transactions.
What Are the Types of Blockchain Networks?
Blockchain networks vary based on accessibility and participation in the consensus process. The primary types are public, private, consortium, and hybrid blockchains.
Public Blockchain Networks: Open to anyone, these decentralized networks, like Bitcoin and Ethereum, allow unrestricted participation. Transactions are transparent and validated by a distributed network of nodes. Popular for cryptocurrency trading, they have introduced the concept of distributed ledger technology (DLT), offering security advantages over centralized systems.
Private Blockchain Networks: Restricted to invited participants, these networks are controlled by a single entity. They offer customization, scalability, and enhanced privacy. Ideal for organizations, they ensure sensitive data remains confined within a trusted circle.
Hybrid Blockchains: Merging features of both public and private blockchains, hybrid networks offer selective transparency. Some data remains private, accessible only to authorized participants, while other data is public. Hybrid Blockchains utilize smart contracts for secure private transactions, making them suitable for scenarios requiring both privacy and transparency.
Consortium Blockchains: Managed by a group of organizations, consortium blockchain platforms allow collaborative validation of transactions. They’re beneficial to supply chain management, where stakeholders need transparent product tracking, and to financial services, where institutions can jointly conduct secure transactions.
In essence, the choice of blockchain type depends on the desired balance between transparency, privacy, and collaborative needs.
What Are the Benefits of Blockchain Technology?
Blockchain technology, initially the driving force behind cryptocurrencies, has now transcended its original domain and is making waves across various industries. From finance to healthcare, supply chain to real estate, its transformative potential is being recognized and harnessed. But what makes this technology so universally appealing?
Enhanced Security:
Cryptography: Blockchain employs complex mathematical algorithms to encrypt transaction data, ensuring its confidentiality and resistance to tampering.Decentralization: Instead of a centralized control point, blockchain operates on a distributed network of nodes. This structure takes out a single point of failure, making the system more resilient against breaches.Consensus Mechanisms: Methods like proof of stake and proof of work validate transactions, adding another layer of security. With these mechanisms in place, all network participants agree on the validity of transactions.Increased Efficiency:
Elimination of Intermediaries: Blockchain’s decentralized nature allows direct peer-to-peer interactions, taking the need for middlemen and associated delays out of the picture.Smart Contracts: These are self-executing contracts with terms and conditions written directly into lines of code. They automate and enforce agreements, eliminating manual interventions and reducing negotiation times.24/7 Operation: Blockchain networks operate continuously, facilitating faster transactions — international transfers especially benefit from it.Transparency and Trust:
Open Ledger: All transactions on a blockchain are recorded on a public or permissioned digital ledger, visible to participants. This transparency ensures that all parties can verify and trust the recorded data.Immutable History: Once a transaction is added to the blockchain, it cannot be altered.Cost Savings:
Automation: Blockchain’s ability to automate various processes, especially through smart contracts, minimizes manual efforts and associated costs.Reduced Transaction Fees: By eliminating intermediaries like banks, blockchain can significantly lessen transaction fees, making operations more cost-effective.Improved Data Integrity:
Immutability: One of blockchain’s core features is that once data is recorded, it cannot be altered or deleted.Reliability: The decentralized nature of blockchain means that data is stored across multiple nodes, diminishing the risks of data loss or system failures.Faster Auditing:
Transparent Records: Auditors can quickly access and review the entire transaction history on the blockchain, which speeds up the auditing process.Reduced Validation Time: The transparent and immutable nature of blockchain transactions eliminates extensive data validation, making audits more efficient and accurate.Electronic Transaction Benefits: Blockchain aids in generating, exchanging, archiving, and reconstructing digital transactions, ensuring a reliable and efficient audit trail.
Disadvantages of Blockchain
Blockchain technology, while offering numerous advantages, also has its limitations.
Scalability Concerns
Scalability remains a significant concern, especially in older blockchain systems like Bitcoin. As these early blockchain networks grow and see increased adoption, they often encounter bottlenecks, leading to slower transaction processing times and increased costs. While blockchain promises decentralization and security, its initial architecture struggles to match the transaction speeds of traditional centralized systems. However, newer blockchains have recognized and addressed this issue, implementing solutions to enhance scalability. This evolution is crucial for the broader adoption of blockchain technology and its potential to revolutionize industries.
High Energy Costs in Blockchain Technology
Blockchain mining, especially in proof-of-work systems like Bitcoin, consumes vast amounts of energy. This consumption arises from the need to solve intricate mathematical puzzles to validate transactions. The environmental implications, including increased carbon emissions, are concerning. Such energy demands also hinder broader blockchain adoption. Nonetheless, alternative models like proof of stake, which reduces energy consumption by eliminating resource-intensive computations, are gaining popularity. Adopting such energy-efficient mechanisms can make blockchain more sustainable and environmentally friendly.
Risk of Asset Loss in Blockchain
The decentralized nature of blockchain poses a risk of asset loss, especially if private cryptographic keys are misplaced. Unlike traditional systems where account recovery is possible, blockchain transactions are irreversible. Losing a private key means permanent loss of associated digital assets. To minimize this risk, it’s essential to securely store private keys, regularly back them up, and maintain robust security practices.
Potential for Illegal Activity in Blockchain
Blockchain, due to its privacy features, can inadvertently facilitate illegal activities. Even though it offers transparency, it also poses challenges for law enforcement in tracing illicit transactions.
The decentralized nature of blockchain makes monitoring transactions difficult. The instance of the Silk Road, an online marketplace known for illegal drug sales and money laundering that exploited blockchain’s pseudonymous nature, is quite telling.
However, blockchain isn’t entirely anonymous. Traditional financial systems have regulations to prevent illegal activities, whereas blockchain’s features might attract those looking to bypass them. Efforts are underway to address these risks and develop regulatory frameworks for blockchain.
How Has Blockchain Technology Evolved?
Since its inception in 2008, blockchain technology has seen a rapid evolution. Initially conceived as the foundation for Bitcoin, its applications have grown far beyond just cryptocurrency. Over time, the technology has been refined, and various types of blockchain networks and platforms have emerged.
First Generation – Bitcoin and Cryptocurrencies
The first generation of blockchain brought forth Bitcoin and other cryptocurrencies, introduced by the enigmatic Satoshi Nakamoto.
Nakamoto’s whitepaper presented a decentralized ledger for secure and transparent digital currency transactions, using 1 MB blocks for Bitcoin transactions. The principles Nakamoto introduced, such as decentralization, cryptographic security, and an immutable ledger, remain foundational.
Bitcoin’s emergence signified a paradigm shift in financial transactions, enabling global peer-to-peer exchanges without traditional financial intermediaries. This groundbreaking phase set the stage for further blockchain advancements.
Second Generation – Smart Contracts
The second generation of blockchain is characterized by the advent of smart contracts, which digitize and automate contractual agreements.
Smart contracts are a groundbreaking feature in the world of blockchain technology. By leveraging a distributed ledger, they can ensure a secure and reliable exchange of goods and services. Records of these digital contracts are stored on the chain and enforced with public key cryptography, which ensures that all parties involved in the transaction are legitimate.
As opposed to traditional legal contracts, smart contracts deliver automated execution when conditions on either side of the deal have been met. This eliminates the need for manual intervention of third parties such as legal oversight, making it much more cost-efficient and time-effective.
Third Generation – Looking Ahead
The third generation of blockchain technology heralds the future, addressing challenges like scalability and computational power that previous generations faced. Significant investments are being made to develop blockchains able to process vast transaction volumes swiftly.
Innovations like sharding, layer 2 protocols, and consensus mechanisms (e.g., proof of stake) enhance scalability. This generation is unlocking a plethora of applications, from supply chains to healthcare and finance. With advancements in privacy, interoperability, and governance on the horizon, third-generation blockchains are set to offer even broader possibilities.
In conclusion, blockchain’s future is brimming with potential. It’s ushering in a decentralized era, transforming how we manage and transact digital assets. As research and blockchain adoption progress, the technology promises to redefine numerous sectors in our digital age.
Blockchain, Explained: FAQ
Who invented blockchain?
The concept of blockchain was first introduced by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. In 2008, Nakamoto published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” that outlined the design and functionality of blockchain technology.
Curious about Satoshi’s true identity? I gathered everything we know about him in this article.
How many blockchains are there?
There are over 1,000 blockchains in circulation as of 2023. The wide variety of blockchains reflects the diverse applications of blockchain technology across various sectors such as finance, supply chain management, healthcare, and more. The continuous growth in the number of blockchains highlights the ongoing development and innovation happening in the blockchain space.
How many cryptos have their own blockchain?
As of now, there are approximately 8,900 cryptocurrencies that have their own blockchain.
What is a node in blockchain?
A node in blockchain is a computer that participates in the blockchain network by maintaining a copy of the distributed ledger. Full nodes store the entire blockchain and validate transactions, while miner nodes bundle transactions into blocks. Lightweight nodes download only block headers, relying on full nodes for detailed data. Archival nodes store the entire history, and in some blockchains, validator nodes validate and add new transactions. Nodes collectively ensure the network’s decentralization, security, and resilience.
What is an example of a blockchain?
Bitcoin is the pioneering blockchain, but there are many other notable blockchains developed for various purposes:
Ethereum is another prominent blockchain platform known for its introduction of smart contracts and the Ethereum Virtual Machine (EVM). Their innovations allow developers to create decentralized applications (dApps) on its platform.
Ripple (XRP Ledger) is designed primarily for payment and remittance services, aiming to facilitate real-time, cross-border transactions between financial institutions at reduced costs.
Litecoin, often considered the silver to Bitcoin’s gold, offers faster transaction times and a different hashing algorithm.
Cardano aims to create a more secure and scalable blockchain and is known for its research-driven approach.
Binance Chain is the native blockchain of Binance, one of the world’s largest cryptocurrency exchanges. It supports the Binance Coin (BNB) cryptocurrency.
EOS focuses on scalability and user-friendliness for dApps and smart contracts, aiming to offer a platform surpassing their competitors in efficiency.
These are just a few examples, and there are many other blockchains, each with its unique features, consensus mechanisms, and use cases.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
Source: https://changelly.com/blog/what-is-boclchain-and-how-does-it-work/
