Blockchain technology is the cornerstone of cryptocurrency systems. Read on to understand the basics of how it works!
What Is A Blockchain?
If we put the blockchain definition in a nutshell, it can be described as an ever-growing list of data records that operates as a decentralized digital ledger. This list is composed of data blocks, which are organized in chronological order and are linked via cryptography.
What You Need To Know About Blockchains
The blockchain concept originated in the early 1990s when Stuart Haber and W. Scott Stornetta implemented cryptographic techniques in a chain of blocks to protect digital documents from data tampering.
This work has inspired many other computer scientists and cryptography enthusiasts and eventually resulted in the emergence of the first cryptocurrency in 2008 when Satoshi Nakamoto published the Bitcoin whitepaper. Later on, many developers experimented with the technology and released their own blockchain solutions to address various tasks.
While the Bitcoin protocol uses blockchain as a means to record a ledger of payments, this technology can be implemented to store other types of information, including votes, deeds, product inventories, state identifications, etc. That’s why blockchain technology can be applied across many spheres, including healthcare, IoT, insurance, and beyond.
Besides, even though blockchain was designed to operate on decentralized systems, it can also be deployed on centralized ones for the sake of ensuring data integrity and reducing operational costs.
In the crypto space, blockchain transactions take place within a peer-to-peer network of globally distributed computing devices called nodes. Once a transaction is submitted to the network, these nodes solve equations to confirm its validity. Verified transactions are clustered into blocks and chained together, forming an immutable history of payments.
As a type of distributed ledger technology (DLT), blockchains are resistant to alterations and fraud. For instance, the Bitcoin blockchain, as a database of records, can’t be modified. It also can’t be vandalized without implementing an unfeasible amount of computational power, which means that Bitcoins are a unique and uncopyable digital asset.
