What is Blockchain: Simple Explanation

What is Blockchain: Simple Explanation

access_time 16th July, 2018

A blockchain originally is growing list of records, called Block, which are linked using cryptography. The blockchain is an undeniably ingenious invention of “the brain child of person or group of people known by the pen name, Satoshi Nakamoto, who introduced it in 2008 to serve as the public transaction ledger of the crypto currency.

A blockchain is a digitized, decentralized public ledger of all cryptocurrency transactions. Which is constantly growing as complete the most recent transaction are recorded and added to a Block in chronological order. It allows market participants to keep track of digital currency transaction without central record keeping. Each node (A computer connected to the network) gets a copy of blockchain, which is downloaded automatically.

Blockchain can only update by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains true and verifiable records of each and every transaction ever made in system.Blockchain is described as a value exchange protocol. Blockchain exchange of value can be completed quicker, safer and cheaper than any traditional system.

What is a Block?

What is a block in Blockchain?

The whole family of blocks is called blockchain. Every node has a copy of the blockchain. Once a block reaches a certain number of approved transaction then a new block is formed. The Bitcoin Blockchain used to update itself in every 10 minutes (which is being reduced drastically). It does so automatically. No master or central computer instructs the computer to do this. As soon as the spreadsheet or ledger registry updates, it can no longer be changed. Thus it’s impossible to forge it. You can add only new entries to it. The registry will update on all computers on the network at the same time.

Key Points

  • A blockchain is type of spreadsheet containing information about transactions
  • Each transaction generates a hash
  • A hash is string of number and letters
  • Transactions are entered in the order in which they occurred. Order is very important.
  • The hash does not depend only on a transaction but the previous transaction hash as well
  • Even a small change in transaction creates completely new hash
  • If a transaction is approved by a majority of nodes then only it is written in to a block
  • Each block refers to the previous block and together make a blockchain
  • A blockchain is effective as it is spread over many computers, each of which has copy of the blockchain
  • These computers are called nodes
  • The blockchain updates itself in every couple of minutes which is being reduced to seconds now

Are Bitcoin and Blockchain same things?

No, they are not, however they are closely related. When bitcoin was released as open source code, blockchain was wrapped up together within the same solution. Bitcoin transactions are stored and transferred using a distributed ledger on a peer-to-peer network which is completely open, public and anonymous. Blockchain is underpinning technology that maintains the bitcoin transaction ledger.

How does Bitcoin and Blockchain work?

The bitcoin in its simplest form is a data base or ledger comprised of bitcoin transaction records. However, this database is distributed across peer-to-peer network and without a central authority, network participant must agree on the validity of transaction before they can recorded. This agreement, which is known as “consensus”, is achieved through process is called “mining”.

The Idea of Decentralization

By storing data across its peer-to-peer network, the blockchain eliminates a number of risk that come with data being held centrally. By design, the blockchain is a decentralized technology. Anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transaction aspects of traditional could become unnecessary. Decentralization means the network operates on a user- to- user or peer - to - peer basis. The form of mass collaboration this makes possible are just beginning to be investigated.

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