Regardless of your interest level, you’ve most certainly heard about Bitcoin, a cryptocurrency invented by the pseudonym Satoshi Nakamoto, who is either one genius individual or a group innovators – we don’t know and most probably never will. To understand this cryptocurrency, you need to know some basics, like the concept of blockchain.
Blockchain technology, initially invented for Bitcoin, allows digital information to be spread across a network without a centralized authority; thus, any transactions performed on the blockchain are entirely public and verifiable by everybody in the network.
The name “blockchain” comes from the way the transaction data is stored, which is in blocks. Each block is linked to the next one forming a chain.
Every transaction is recorded and confirmed with time and sequence and publicly recorded onto the blockchain within a network. Each block contains a hash (a unique identifier), batches of recent valid transactions including time stamps, and the hash of the previous block. This hash links the blocks together and prevents the blocks from being modified or from another block being inserted in between existing ones. Each block therefore strengthens the verification of the previous one and hence the entire blockchain.
All this information is stored in blockchains and shared in the network, hosted by millions of computers at the same time. This makes it public and transparent. Due to this decentralization, meaning there is no centralized version of all the stored data, it’s an unattractive target for hackers, which makes blockchain technology very safe.
This system provides all blockchain users with an incredible level of transparency and safety:
Sharing the same information with every participant in the network at the same time means that information is easily accessed and verified by everyone.
By not having a central authority, it is almost impossible for the database to get hacked or altered without the permission of every single user of the network.
Thanks to blockchain technology, cryptocurrencies are able to exist, the most famous one (for now), is Bitcoin.
Read more about blockchains in this “Step-by-Step Guide for Beginners” on blockgeeks.com.