Benefits Why Blockchain Is More Secure
Blockchains store data in blocks, which are linked together with cryptography. As each new block is filled, it is chained to the previous block, keeping all data connected in chronological order. Since a blockchain is shared among different nodes of a computer network, tampering with the information is nearly impossible, which is why Bitcoin and other cryptocurrency providers can offer such secure financial transactions.
Four key elements build the foundation of blockchain technology:
- Smart contracts: Software code can be triggered to automatically execute contractual obligations (like an asset transfer).
- Hash functions and digital signatures: With its anti-tampering measures and strong encryption, data can’t be altered retroactively.
- Peer-to-peer network and distributed ledger: With each blockchain being replicated on different nodes, it offers transparency and resilience for each block of data.
- Consensus algorithms: Since a consensus mechanism authenticates underlying data, there’s no need for intermediaries in a transaction.