Bitcoin and other cryptocurrencies need a blockchain to work. If you want to learn about cryptos, you will also need to learn about blockchain.
Blockchain technology is a digital ledger for keeping track of who owns what. It is a decentralized database that stores data online on different computers in a way that makes it difficult to change it once it is registered.
Through the blockchain, participants can transfer items such as money, property, and contracts without the help of a third party, such as a bank or government.
Data in a blockchain is stored in individual “blocks”, which are then aggregated according to a set of rules called a consensus mechanism. The blocks are then linked in chronological order, creating a chain of blocks, hence the name blockchain.
Digital information can be anything and depends on the type of blockchain. Blockchain technology is widely used to record the history of cryptocurrency transactions.
For example, the Bitcoin blockchain stores data about a transaction, such as the recipient’s or sender’s address, the number of Bitcoins, and the timestamp.
Blockchain technology is also a distributed ledger technology or DLT, which means that it does not have a captain in command. Instead, it is managed by multiple people.
Transactions are recorded on a blockchain with a cryptographic signature called a hash, which is a set of letters and numbers that summarize all the information in a block.
That means that if a block in a chain were to be changed, the alarms would go off immediately. So if someone tries to cheat the system, boy do they have their work cut out for them as they would have to change every block in the chain.
It is not to worry. Blockchains like Bitcoin and Ethereum are always growing as blocks are added to the chain, making the digital ledger more secure.
