Blockchain
The blockchain is a ledger system technology that records data in a series of linked and immutable blocks via a peer-to-peer network. Each one of these blocks contains a collection of transactions, a timestamp and a cryptographic hash of the previous block. This is done to both enforce transparency and make the blockchain a secure and tamper-resistant chain. Likewise, the blockchain operates on a decentralized network, meaning that there is no one central authority, making it optimal for trading cryptocurrencies as well as supply chain management and sharing secure data.
Distributed ledger
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Distributed Ledger Technology (DLT)
Examples
Let’s say you want to send 1 Bitcoin (BTC) to a friend. You would do this by creating a transaction and using their wallet address. This is then broadcast to the blockchain network in the form of a cryptographic puzzle. This basically just means that the input (your transaction request) gets recoded into a sort of puzzle as the output. Miners then “solve” this puzzle within ten to twenty minutes by matching the output to the input and thus both validate the transaction and add it to the blockchain network.
FAQ
How does the blockchain ensure data security?
Blockchain uses cryptographic hashing (the so-called puzzle from the example) and decentralized consensus mechanisms to secure data. Each block contains the hash of the previous block, forming a sort of chain-link fence where individual links can’t be tampered with.
What is the biggest problem with the blockchain?
The main issue the blockchain faces is scalability. Namely, maintaining the blockchain is a very energy-intensive process, leading to both environmental concerns and hardware limitations. Some also look negatively towards the blockchain due to the polarizing reputation of cryptocurrencies.
What is the difference between public and private blockchains?
What is the difference between public and private blockchains?
