Blockchain is the technology that allows the user to create a decentralized system of transaction and data transfers.For the naïve person, it is a method to create a people’s bank without central banks! Blockchain technology is used in the backend for each cryptocurrency. Talking about that, Blockchain is building the blocks of every critical data and then chaining the blocks. So if the last block or any previous block is changed or updated, then every information in the chain needs to be updated. This makes blockchain technology secure and more robust compared to other technologies.
Blockchain is a shared, immutable ledger that felicitates the process of recording transactions and tracking assets in a business network. An investment can be tangible (a house or a car) or intangible (Intellectual property, patents, or copyrights). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
Finally, Blockchain is a growing list of records, called blocks linked together with cryptography which is also described as “trustless and fully decentralized peer to peer immutable data storage which is spread over the network of participants often referred to as the nodes. Every block contains a cryptographic hash of the previous block and the timestamp, and the transaction data.
But first, let’s get back to basics. What is Blockchain, and how does it work?
A blockchain is a file for storing data. Or, it’s an open, distributed database system to put it in more technical terms. The data is distributed (i.e., duplicated), and the whole Blockchain is decentralized. This means no one person or entity (say, a government or corporation like Google or Microsoft) has control over the Blockchain; this is a radical departure from the centralized (Government databases) databases controlled and administered by businesses and other entities.
So how does it work? In straightforward terms, the file consists of blocks of data, with each block being connected to the previous block with the hashing code, forming a chain. Hence, the name blockchain. As well as the data itself, each block also contains a record of when that block was created or edited. It contains the hash code of the previous block, which makes it very useful for maintaining a complex system of records that cannot be corrupted or lost, and this is the primary use case to preserve the integrity of the data.
Because the whole Blockchain is duplicated across many computers, any user can view the entire Blockchain in the case of public blockchains. Transactions or records are processed not by one central administrator but by a network of users who work to verify the data and achieve a consensus; these verifiers are known as miners, each miner is paid some cryptocurrency for successful mining. If this sounds familiar, Bitcoin operates in the same way. Bitcoinis the first example of Blockchain in action.