Blockchain Technology: How blockchain works? | HCL Whitepaper

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Blockchain technology is a trusted, replicated, distributed, and shared ledger for managing and recording transactions across multiple participants. All the participants connected to the transactions hold the information through peer-to-peer verification of transactions. Transactions are no longer stored in a central database but among the participants (called nodes).

Blockchain has evolved a lot since its inception a decade ago. This whitepaper focuses on the concept behind this trusted technology and discusses why we should think of it as an enterprise wide solution for the future.

Centralized systems uses client/server architecture client nodes are directly connected to a central server node. Here, client sends a request to a company server and receives the response.

This is easy to secure physically and more cost efficient for small systems up to a certain limit but highly dependent on the network connectivity. The system does not suffer from degradation of system or abrupt failure of the entire system.

Also, these systems can’t scale up vertically after a certain limit – even if you increase the hardware and software capabilities of the server node, the performance will not increase appreciably.

Every node makes its own decision. The final behavior of the system is the aggregate of the decisions of the individual nodes. Note that there is no single entity that receives and responds to the request. All nodes are peers to each other and no one node has supremacy over other nodes.

Vertical scaling is possible with minimal problem of performance bottlenecks and high availability. Each node can add resources (hardware and software) to itself to increase the performance but leads to coordination problems at the enterprise level. When every node is owner of its own behavior, it’s difficult to achieve collective tasks. Private Cryptocurrency Networks are best suitable candidates.