Blockchain is a technology that allows for a new way of registering and distributing digital information without the need for intermediaries. It is a digital ledger of transactions of any type of value: cryptocurrency, records, contracts, etc. Anyone on the internet can access the blockchain database, which is not stored in a single place, but hosted by many computers around the world.
The technology is made up of blocks, which contain information both about previous blocks’ transactions and the current transaction being recorded. They also have timestamps so the chain of these blocks follows a chronological order in order to be easily checked if a dispute appears. This way all the information in it is transparent and verifiable by the public, making it extremely difficult for hackers to tamper with. Attackers would also need huge computational power to change even one transaction as they would need to go back and change the whole blockchain.
The decentralized nature of blockchain solves the double-spending problem: when there are two simultaneous transactions, the one which receives the most confirmations on the blockchain is incorporated on the ledger, and the other is thrown out or deemed invalid by the miners. Blockchain also prevents fraud, and manipulation (e.g. exertion of political power over central banks; collusion between financial authorities) by eliminating the need for central authorities. Instead, authentication happens through cryptography. A long number generated randomly, is the “public key” each user owns to access the blockchain. It is an address where records of a user’s transactions are stored. Users also have “private keys” or a type of password which gives access to owners’ digital assets (cryptocurrencies, records, etc.) Public keys are exchanged between parties, facilitating a transaction. Private keys must not be shared with anybody but safeguarded by each user to protect their account. This cryptography allows for greater security than the easily hacked “username/password” system we use every day.
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The technology is made up of blocks, which contain information both about previous blocks’ transactions and the current transaction being recorded. They also have timestamps so the chain of these blocks follows a chronological order in order to be easily checked if a dispute appears. This way all the information in it is transparent and verifiable by the public, making it extremely difficult for hackers to tamper with. Attackers would also need huge computational power to change even one transaction as they would need to go back and change the whole blockchain.
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