How Does Blockchain Work?
Blockchain for Business Video Series
Blockchain for Business serves to educate business professionals on the various benefits of blockchain technology, and how it can be utilized effectively in their industry. Understanding how blockchain works, the components that drive its technology, and the security measures embedded within provide a foundation to blockchains potential.
Inner Workings of Blockchain Technology
In Video One of our four part series, Director Matthew DiBona introduced us to the fundamental components of blockchain. We learned that blockchain is an advanced digital ledger, which makes up a collection of transactions issued on a distributed network. But how does blockchain work?
When a transaction is issued to the blockchain network, it undergoes an extensive validation process through a series of nodes. These nodes are in competition with one another trying to solve a complex mathematical problem, referred to as proof of work. The desired end result of the process is a secure and efficient validation of the initial transaction.
In this segment, Matthew addresses how blockchain works, the inner components of blockchain technology in detail, and how each component works together simultaneously.
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How Does Blockchain Work?
- First, a transaction is issued to the blockchain network. This could come from an enterprise application or crypto-currency exchange.
- Next, that transaction hits a node, which then propagates that transaction to the other nodes in the network. Each mining node is also collecting transactions and propagating them across the network.
- Each node confirms that the transaction is valid, the parties are valid, and the balances on both sides of that transaction are acceptable.
- As part of the validation, each node attempts to solve a complex mathematical problem called proof of work. This competition across the nodes is what gives the blockchain network it’s security.
- When one of the nodes solves this problem, they broadcast their solution to the other nodes. The other nodes confirm that it was indeed the solution, and that node is considered the winner.
Once the proof of work is validated by the other nodes, the winning miner is able to attach that block to the end of the blockchain, cryptographically chained to the previous block.
Keep Watching: Blockchain in the Food Service Industry
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