This article is for anyone who is interested in learning more about the blockchain but isn’t sure what it is. The objective is to help you grasp what blockchain is; thus, certain simplifications were made when writing this.
So, let’s get started.
You propbably haven’t been living under a rock, so you’ve undoubtedly heard the term “blockchain” being bandied about recently. It seems to be one of the hottest terms of the year. However, many individuals appear to have no idea what blockchain is or how it works.
A blockchain is a piece of software that allows a network of computers to communicate directly with one another without intermediaries. It creates a distributed or decentralized network of computers that allows values to be communicated, traded, or securely kept in real-time and at a cheaper cost.
The data is replicated across several nodes, with each node running a copy of the blockchain. Blockchain removes the possibility of digital records being lost due to this and the fact that data is kept immutably in chains.
It also minimizes the likelihood of the papers being tampered with and the possibility of them becoming unavailable if one user’s node or computer is unavailable.
Aside from the description given above, the term blockchain refers to a chain of blocks. As transactions are completed on the network, data is saved in blocks, subsequently aggregated and protected. The blocks in the chain are connected, making it difficult to lose track of the history of transactions.
Furthermore, each block is time-stamped, with information such as transaction time, date, and amount made public.
In 1991, blockchain technology was first developed. It emerged from the necessity to digital time-stamp documents to prevent them from being tampered with or backdated. Stuart Haber and W. Scott Stornetta, two research scientists, presented a method for storing time-stamped documents that employed a chain of blocks protected by cryptography.
Later on, it became feasible to combine many documents into a single block and then link one block to another. This is after the Merkle Trees were introduced to the architecture in 1992 to improve the efficiency of blockchain technology.
A block can then hold a succession of data records before being linked to the next, with the most recent one detailing the block’s history. The blockchain technology’s patent expired in 2004, and the technology has been unused since then.
Here’s how blockchain, known as distributed ledger technology works. Taking bitcoin as an example:
Blockchain establishes a distributed ledger that several networked devices may access. Individuals on the network may safely transfer files and digital assets like cryptocurrency without the use of middlemen.
This means that there will be fewer outages, and the network will be more reliable since there will be no single point of failure. All assets are safeguarded with excellent security, thanks to cryptography.
The most important aspects of blockchain are its security, which is ensured by cryptography; scalability, which means the network should be able to accommodate millions of users while maintaining security and reliability; and decentralization, which means that control and governance must be achieved by all users on the network rather than a select few.