This article is for anyone who is curious about Blockchain but is not clear about what the tech exactly holds. Our goal here is to make more and more people aware of this technology in the simplest methods.
What is the blockchain?
Yes, Blockchain = Block + Chain = list Of blocks
Here, we are starting with an analogy of the money transfer from my account to your account. Remember, blockchain has many uses cases, the money transfer system is one of them.
Suppose, I make a transaction of some amount from my account to your account.
When I make a transaction from one account to your account, there has to be a place where this transaction information must be written down.
That place is a Block.
In aBlock, we write the information like:
- Who is transferring the money to whom?
- The amount associated with that transaction.
- Some other pieces of information like the signature.
So, the block is an information holder similar to the cheque in the bank.
As there are many transactions, there will be many blocks.
And these blocks are connected through a chain to form a blockchain.
Why are the blocks connected?
The blocks are connected in order to provide the security to the information.
Any modification requires an end-to-end modification and verification. It’s not easy to modify any data by some hack. If tampered with, the blockchain will become unstable and the tampered block can easily be spotted.
Security is the main reason that is why these blocks are connected.
Now in more depth, What is the blockchain?
The blockchain is a distributed and decentralized ledger that stores data such as transactions, which is publicly shared across all the nodes of its network.
The above seems to be a very tricky definition of the blockchain.
Well, don’t fear. We will understand each of those in detail.
The ledger is the main record holder which holds the list of the block.
The block stores the data (information). The data can be anything or of any type, we can think of.
Distributed and decentralized ledger
Normally, there is the central machine which is responsible for handling and updating the data. But in the blockchain, the blocks are spread across a wide network of millions of users (so it is not centralized) and all the machines are connected peer to peer with each other. And all those machines are having the same ledger. Hence, the blockchain is distributed and decentralized ledger.
In other words, the blockchain is distributed as the ledger itself that is shared with everyone using the same blockchain network. Each one gets the copy of the entire ledger and gets the update when something is added anywhere.
Shared across all the nodes of its network
There is a network in which each machine is connected with each other. Every node (machine) is having the same copy of the ledger. It means the ledger is shared across all the nodes of its network.
This was a small introduction to what is Blockchain.
There is an opportunity to recreate the financial world as we know it in the parallel universe that is the blockchain. We are writing rules for this whole new universe.
Patrick M. Byrne