The entire crypto ecosystem works on the blockchain platform and it is very important to understand what a blockchain is. Here is a simple guide to tell you about all the basics of a blockchain.
What is a Blockchain?
As per definition, a blockchain is a continuously evolving digital ledger or list of records. It is very important in the crypto world because with the help of blockchain, each and every transaction can be verified which proves that every transaction was valid and the funds were transferred.
This ledger is completely transparent and public. They are shared globally and are completely secure.
The concept of blockchain was initiated in 1991 during the cypherpunk movement. But the successful implementation of the blockchain based secured cryptographic digital currency was done by Satoshi Nakamoto nearly 20 years after the initial concept in the form of Bitcoin blockchain.
A blockchain means that each and every change in the digital ledger of the cryptocurrency can be tracked. The uses and applications of this system are endless. It is not merely a database but a virtual supercomputer.
Working of Blockchain
Each new block or transaction in the blockchain must agree with the previous block. If there is a lack of agreement between the new block and the previous block, the cryptocurrency will automatically reject the new block and make it an invalid transaction.
Blockchains use smart contracts which make the entire platform secure and fair. In the case of smart contracts, the next step is triggered only when the previous conditions are met. This enables the smart contracts to manage even the most complex transactions including financial transaction.
Nature of Blockchain
As the name suggests, a chain of blocks is created in this platform. Each new block is chained to the previous one as the blocks are distributed widely among different computers and servers across the world. And because of the distribution of blocks, not a single entity can change the history of the blocks making it decentralized in its approach.
Advantages of using Blockchain
- Secure: Blockchains are more secure than private databases.
- Resilient: The blockchain records are immutable and resilient to attacks.
- Transparent: The complete database is transparent and every transaction is verifiable.