If you have just heard about it, you might find it hard to take in how this system operates. In a few words, block chain is a system for retaining and reporting information but what distinguishes it from other available systems is that all your information is shared among a group of members, which makes it impossible for hackers to manipulate or take advantage of it for any fraudulent purposes.
The advent of this technology can be traced back to when Bitcoin was introduced and used as the first cryptocurrency to store the information of its network members.
To illustrate this system and gain a better understanding of the functionality, take Bill Gates in front of hundreds of cameras showing the deeds of his house as an example. If an individual plots to destroy the documents or manipulate them, it is crystal clear for the other people that the house belongs to Bill Gates because everyone has a copy of the deeds, so it would be definitely impossible for scammers to make a change to all the pictures taken by the cameras.
Block chain is a digital purchase-and-sales ledger which replicates transactions and share them with other members. The steps that are taken are as follows:
1) In every block of time when a deal is going to be made, the new data is stored in a particular chain
2) As this chain is linked to other chains in a network of computers all over the world, the details of the deal are investigated in order to be confirmed. In other words, the financial transaction which is going to be effected is under observation for confirmation by a large number of computers linked worldwide.
3) After access confirmation and effecting the transaction, the data is archived in an exclusive block.
4) Finally, the block is hashed (coded) and then added to the block chain.
The main advantage of block chain technology is that it can act as a deterrent against any scams because all kinds of business deals are recorded in a particular ledger which, after hashing, is accessible to all parties of the transaction.
New blocks are created in a linear and chronological order and they are placed at the end of the block chain afterwards, so each block has its own position which is identified with a measure called ‘Height’.