Post 5: Blockchain Networks

Blockchain as a revolutionary component to financial technology and features innovative measures to supplement the ever-increasing volume of financial data and transactions. These transactions include retail point of sale, real estate transactions, invoicing, and other means of financial and cyber communication. Every day we participate in the exchange of information that’s facilitated on computer networks in which all the data associated with the transactions are stored. With this in mind, we are in the process of fully transitioning over from paper dollars to digital dollars, and even though we are familiar with the idea of the digital mediums of exchange (such as credit and debit cards) we haven’t completely made the transition just yet. But as anyone can see it is well on the way to full adoption for data storage and record keeping.

But how does blockchain function and how does it work? Well, all the different cryptocurrencies that we know of all must run on what’s called a “blockchain network” to facilitate transactions. Now, a “network” is a database that is distributed among several computers as opposed to one central computer, and each computer houses a “node” where transactions are validated, recorded and stored, all of which is made possible by smart contracts. This network of computers comes together to make up the blockchain, and there are several different networks such as the “bitcoin network” or the “Ethereum Network” and so forth. The distribution of the network via multiple computers adds a failure prevention mechanism that compartmentalizes the transactions via “blocks” that when in case of failures only a block could potentially be affected as opposed to the entire chain, thus the network will still be operational, and transactions will continue without interruption of the need to process transactions.