What exactly is blockchain?
Blockchain is a method of storing information in such a way that changing, hacking, or cheating the system is difficult or impossible.
A blockchain is essentially a digital ledger of transactions that is replicated and distributed across the network of computer systems that comprise the blockchain. Each block in the chain contains several transactions, and whenever a new transaction takes place on the blockchain, a record of that transaction is added to the ledger of every participant. A decentralized database managed by multiple participants is referred to as Distributed Ledger Technology (DLT).
Blockchain is a type of distributed ledger technology that records all transactions with an unchanging crypto fingerprint known as a hash.
This means that if one block in a chain was changed, it would be obvious that it had been tampered with. To corrupt a blockchain system, hackers would have to change every block in the chain, across all distributed versions of the chain.
Blockchains such as Bitcoin and Ethereum are constantly growing as blocks are added to the chain, significantly increasing the security of the ledger.
What’s the big deal about blockchain technology?
There were numerous attempts to create digital money in the past, but they’ve all failed.
The core problem is one of trust. How can we be sure that if someone invents a new currency called the X dollar, they will not take a million X dollars or steal your X dollars?
Bitcoin was created to address this issue by using the blockchain, which is a type of database. Most conventional databases, such as SQL databases, have someone in charge who has the authority to change the entries (e.g. giving themselves a million X dollars). Blockchain is unique in that no one controls it; it is managed by the people who use it.
Moreover, bitcoins cannot be faked, hacked, or double spent, so those who own this currency can be confident that it has some monetary value.
