What is Blockchain?
Blockchain, also known as Distributed Ledger Technology (DLT), makes a digital asset’s history unalterable and transparent. This is made possible by the use of decentralization and cryptographic hashing. A good analogy for this would be to look at a Google Doc. You give viewing access to a group of people through a link, and that’s how the document is transferred, instead of being downloaded or copied anywhere. This is the chain that’s previously talked about where everyone has access to watch the changes being made simultaneously. Everyone can see the history of the changes being made, so it’s transparent, but you can’t make changes yourself. That’s it in a nutshell, but much easier to understand. In general, it’s a database that stores encrypted “blocks” of data and then “chains” them together to form a sort of book of changes of the data. Then the assets are distributed instead of copied or transferred, thus creating an unchangeable record of the asset. Then said asset is decentralized, allowing everyone in the public to see it transparently. There’s a ledger that provides the known integrity of the asset, which in turn creates trust around it. People prefer to use a blockchain because it’s so easy to make it, so there’s less risk and chance of fraud. People like the transparency it brings.
Important parts of the blockchain
Blockchain consists of the three most important concepts: blocks, nodes, and miners:
Blocks have three basic elements:
1. The data that’s in the block.
2. A nonce is a 32-bit whole number that is generated when the block is created, thereby creating a block header hash.
3. The hash is a 256-bit number wedded to the nonce. When a block of a chain is created, the nonce creates the hash. After the nonce creates the hash, the data that’s inside the block is forever tied to the nonce and hash unless it’s mined.
These create new blocks on the chain through mining. Every block has a unique nonce and hash, but blocks also have references to the hash of the previous block in the chain. Mining blocks in chains is incredibly difficult. Making a change to an earlier block in the chain requires re-mining the blocks that need to be changed, but every block after that, thereby making it incredibly difficult to manipulate the technology.
This includes one of the most important concepts in blockchain, called decentralization. As no one computer can hold all of a specific chain, there are different parts of it that are distributed via the nodes that are connected to this chain. Nodes are any electronic devices that maintain the blockchain and keep the network functioning. Each node has a copy of the blockchain and must be approved by the algorithm whenever the chain is updated. As blockchains are transparent, this means that every action that happens in a ledger has the ability to be checked and verified. This is just a beginner’s section on what blockchain is. To learn more about it, click here!