Different Types of Blockchain Technology for Data Protection
Blockchain technology is utilized for all types of cryptocurrency transactions. It is a fully digitalized, decentralized, and public ledger. Blockchain stores all data in the form of blocks, which can be added to or removed from the blockchain in chronological order. For digital currency transactions, it is beneficial for users to maintain a record; blockchain technology offers this record-keeping capability. This information will automatically download to the user’s computer, but only when connected to the internet.
For Bitcoin, the first virtual currency, a robust security mechanism is essential to ensure users can conduct secure and efficient transactions with complete data protection. Currently, the well-known distributed ledger technology (DLT) is employed to verify all transactions related to digital currencies. Blockchain technology creates blocks to store information and maintain records that cannot be altered under any circumstances. The entire community adheres to this technology.
Blockchain and Bitcoin
On average, a new block is added to the blockchain approximately every 10 minutes. One of the most notable innovations developed by Bitcoin is its underlying blockchain technology. Since it is decentralized, there is no single authority governing its rules and regulations. Only Bitcoin users can validate and verify digital transactions when one user pays another for goods or services. There is a direct relationship between Bitcoin and blockchain, eliminating the need for a trusted third party, such as banks. All information within the blockchain is stored in blocks, and each block includes the following components:
- A set of all valid transactions
- A timestamp
- A link to the previous block
Blockchain can be categorized into three main types: public blockchain, consortium blockchain, and private blockchain.
Public Blockchain
A public blockchain allows anyone to read and transfer digital currency to another person without hesitation. Users can also verify the validity of transactions as part of the consensus process.
Consortium Blockchain
In a consortium blockchain, a specific set of nodes is required for all processes, including consensus. These nodes are pre-selected, and each user must validate every block by signing it.
Private Blockchain
In a private blockchain, all permissions to write data are restricted to a single organization, while read permissions are available to all users. Applications for auditing and database management commonly use private blockchain technology.
Blockchain technology is applied in numerous fields. The economic status of countries is improving with the increasing adoption of Bitcoin and digital currencies, primarily due to the data protection that this technology offers. Payment-related transactions are notably efficient with this technology, and understanding its benefits is essential.
