What is blockchain technology?

Blockchain technology is a sophisticated database mechanism that enables transparent sharing of information within a business network.

The blockchain database stores data in blocks linked together in a chain. Data is chronologically consistent because you cannot delete or change the chain without consensus from the network. As a result, you can use blockchain technology to create an immutable ledger to track orders, payments, accounts, and other transactions. The system has built-in mechanisms that prevent invalid transaction entries and create consistency in the shared view of these transactions.

What is the use of blockchain?

Not just for NFT (Non Fungible Token) and crypto. Blockchain can be applied to various sectors, such as supply chain, healthcare, insurance, gaming, finance, real estate, and even government!

Why is blockchain important? Traditional database technology presents several challenges for recording financial transactions.

For example, consider selling a property. After the money is exchanged, ownership of the property is transferred to the buyer. Individually, both the buyer and seller can record the monetary transaction, but there is no trustworthy source. The seller can easily claim they haven't received the money even though they have, and the buyer can argue they've paid the money even though they haven't.

Additionally, blockchain has Layer 1 and Layer 2. What's the difference between Layer 1 and Layer 2 in Blockchain?

Layer 1 It is the blockchain network that runs typically.

Examples of Layer 1 Blockchains Bitcoin, Ethereum, Solana

Limitations of Layer 1 If the number of users and transactions increases, the Layer 1 blockchain may experience:

• Slower transaction completion time
• Transaction costs becoming more expensive

Layer 2 It is a separate blockchain network built on top of the Layer 1 blockchain to expand the network.

Examples of Layer 2 Blockchains Polygon, Immutable X

Functions of Layer 2

• Speed up transaction processing
• Reduce transaction costs
• Expand network use cases.

Conclusion: Blockchain is a future technology that can simplify human life in various fields. Due to its enormous potential, many companies worldwide are competing to build their blockchain-related projects. With this article, it is hoped that it can increase your knowledge about blockchain. Stay tuned for our upcoming article on Blockchain. We will discuss more about web3 and its surroundings!

Thank you!