Blockchain is a decentralized digital ledger that securely stores records across a network of computers. In a way that is transparent, immutable, and resistant to tampering. Each “block” contains data, and blocks are linked in a chronological “chain.”
A blockchain is a distributed database or ledger shared across a computer network’s nodes. They are best known for their crucial role in cryptocurrency systems, maintaining a secure and decentralized record of transactions, but they are not limited to cryptocurrency uses. Blockchains can be used to make data in any industry immutable meaning it cannot be altered.
How does a Blockchain work?
- Blocks: Transactions are grouped together in a block. Each block contains a list of transactions, a timestamp, and a reference to the previous block.
- Decentralization: Instead of being stored on a single server, the blockchain in distributed across a network of computers. Each nodes have a copy of the entire blockchain.
- Consensus Mechanism: To add a new block, nodes must agree on its validity. This is achieved through consensus mechanisms like Proof of Work or Proof of Stake, which ensure that the majority of nodes agree on the current state of the blockchain.
- Cryptography: Each block is linked to the previous one through a cryptographic hash, creating a secure chain. If any information in a block is altered, it changes the hash, making it clear that tampering has occurred.
- Immutability: Once a block is added to the blockchain, it is nearly impossible to change. This immutability ensures that transactions history is secured and trustworthy.
- Transparency and Security: All transactions are visible to participants, enhancing transparency. The cryptographic and decentralized nature of the blockchain also provides security against fraud and unauthorized changes.
Overall, blockchain technology enables secure, transparent, and tamper resistant transactions, from cryptocurrencies to supply chain management.
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