Blockchain technology is a digital ledger for keeping track of who owns what. It is a decentralized database that stores online data across different computers in a way that makes it difficult to change once it’s on record.
Through blockchain, participants can transfer items such as money, property, and contracts without the help of a third party like a bank or government.
The data in a blockchain is stored in individual ‘blocks’, which are then added according to a set of rules called the consensus mechanism. The blocks are then linked in chronological order, creating a chain of blocks, hence the name blockchain.
The 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, Bitcoin’s blockchain keeps data on a transaction like a recipient’s or sender’s address, the number of Bitcoins, and the timestamp.
Blockchain technology is also a distributed ledger technology or DLT, meaning it doesn’t have a captain at the helm. Instead, it is managed by multiple people.
Transactions are recorded in a blockchain with a cryptographic signature called hash, which is a set of letters and numbers summarizing all information in a block.
That means if one block in a chain were changed, 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 need to change every block in the chain.
Not to worry. Blockchains like Bitcoin and Ethereum are always growing since blocks are added to the chain, making the digital ledger more secure.