12 Feb BLOCKCHAIN DEFINED AND EXPLAINED
Blockchain is a distributed ledger technology that forms the foundation for cryptocurrencies like Bitcoin and platforms like Ethereum. At its core, a blockchain is a digital ledger that records transactions in a secure and transparent manner across a decentralized network of computers, rather than being stored in a central location.
The term “blockchain” comes from the fact that information on the ledger is packaged into “blocks” that are chained together chronologically and cryptographically. Each new block contains a cryptographic hash of the previous block, creating an immutable, tamper-proof record of all transactions that have occurred on the network.
A leading innovation of blockchain technology is decentralization. Rather than a central authority like a bank or government managing the ledger and verifying transactions, this work is done collaboratively by the computers in the blockchain network. Transactions are validated through a consensus mechanism in which the computers on the network follow a protocol to agree on the state of the blockchain ledger. This makes tampering practically impossible, as an attacker would need to gain control of over half of the decentralized network to manipulate transaction data.
The technology enables peer-to-peer transactions without intermediaries. For the first time, two parties can safely and securely exchange digital assets, data or smart contracts over the internet with no need for a third party like a bank. Such disintermediation potential also promises to reduce fees and processing times for transactions.
Moreover, the transparency of blockchain means all participants in the network can view transaction histories. While personal information is kept private, the public nature of blockchain transactions helps ensure honesty and accountability.
At its core, blockchain allows digital information to be distributed without being copied or modified, creating an immutable record. The decentralized, transparent and highly secure foundations of blockchain technology are enabling innovations across finance, government, supply chain and many other sectors. From cryptocurrencies to smart contracts to decentralized finance, blockchain promises to transform business models and disrupt industries in coming years.