Blockchain is all over the media lately. Some people even have investments in this form of technology. Some confusion is understandable for those that haven’t invested yet. Investors of cryptocurrency know that it keeps a record. That record documents what’s happening in the Bitcoin network.
The Basics
Blockchain technology grants communication through approval. It does so through the actual state of a ledger of a group of cryptocurrency investments. Each one can contain data, that’s shared as transactions, and so on. It’s secured through cryptography. Also, it needs the same nodes as traditional networked systems. That’s what gives Bitcoin the ability to make financial transactions across the world. Here is a breakdown.
- Blockchain uses databases to create blocks linked together.
- It’s linked in chronological order.
- Ledger transactions are the most common blocks used to link it all up.
- Bitcoin, for example, uses a decentralized system to avoid control from one person.
- These decentralized chains are irreversibly unchanged.
- That makes it permanent.
- It’s also open for all to see.
More Details
While it may feel complicated to some people, blockchain is straightforward. It does help for the person to understand a database first, though. In its most basic description, a database is information. That information gets stored on a computer hard drive somewhere. It might be local or accessed over the internet. It filters information like a search engine. In fact, every search engine out there is nothing more than an extensive database. It uses a table format to organize everything for easy access.
Blockchain organizes data into chunks. Those chunks connect in a way that shows a timeline of data with a timestamp. In this case, the computer network is the database. Unlike a database, though, it never changes. It’s reliable and verifiable. It also uses thousands of computers. Each one scattered all over the world to verify each block accurately. If ever tampered with, all nodes cross-reference and timestamp it. It’s live and accountable, making it a perfect way to handle financial transactions with complete transparency.
It also offers banking for those that fail to use traditional banking systems. It’s far more secure than carrying cash. Some have argued that it helps crime to exist. Those that know the system would say that the transparency of the system proves it’s safer.