Here is the Process of Transactions in Blockchain
When it comes to blockchain, there are several steps that a transaction must go through before it is added to the rest. The main focus is usually on authenticating the transaction and authorizing it through proof of work and adoption of proof of stake. Before a transaction is added to the previous transactions, it must go through a specific process. Here is the process outlined.
The best thing about blockchain is that it uses decentralized financing. That means it does not require middlemen or intermediaries like banks or regulators to control transactions. However, transaction authentication must take place. Once a transaction is requested, it will be authenticated to proceed. The process of authentication happens through cryptographic keys that provide user identification and provides them access to their wallet or account on the system. Remember, every user has a private key that they don’t share with anyone and a public key that everyone can see. They must use both keys to authenticate and start the transaction.
After authentication, the transaction will require approval and authorization before it can be added to a block. A public blockchain must have consensus before the transaction is added. That means the nodes must agree the transaction is genuine. There are people behind the computers that verify transactions for rewards. This is called proof of work.
- Proof of Work
Proof of work is another process involving the execution of mathematical problems to add the transaction to a block. Solving the problem is called mining, and the people who do it are called miners. Miners get rewards for their work in cryptocurrency. However, you need to know that mining is complex. The chances of solving the problem are incredibly slim, meaning you need a lot of computing power. Therefore, the rewards you get from mining must outweigh the cost of keeping your computers running throughout. Using a single computer can take years before you find a solution to a single mathematical problem.
Companies create a pool of miners that pull their resources together. They then share the rewards they get. Therefore, with the growth of a blockchain, more computers can combine to solve mathematical problems. Unfortunately, this is not often the case. As the network increases, the distribution spreads further and harder it gets to solve a problem. Therefore, mining is best if done by a few miners.
- Proof of Stake
Lastly, transactions must go through validation. Blockchain has adopted proof of stake (PoS). That means the people doing the transaction must stake in the blockchain. They must have cryptocurrency that will allow the selection or validation of the transaction. The best thing is that mining is not necessary. Therefore, it saves a great deal of computer power. Furthermore, the introduction of smart contracts has made it easy to execute transactions as long as specific conditions have already been met.
These are critical processes that a transaction in blockchain must go through before it is added to the records. It must meet all the requirements, be authenticated, and be authorized before validation.