By now, everybody has heard of the digital currency known as Bitcoin. This cryptocurrency relies on blockchain to transfer, record, and protect transactions. But what exactly is blockchain?
Just as its name states, blockchain is a series of blocks chained together. These blocks consist of a growing list of records, such as you would find in a ledger. What differs from most ledgers is the technology behind the process.
With transactions recorded across many computers, modifications of the transaction can’t occur unless alterations occur with all ensuing blocks. Authenticity can be checked because each transaction is digitally signed. The block contains three pieces of data: information about the transaction, such as the time and date; the people conducting the transaction; and a unique code to distinguish one block from another. The blocks are then linked with a chain, which is a public database.
After a transaction occurs, there are three steps that take place to add a block to the blockchain:
- The transaction needs to be verified.
- A block is created and stores the transaction information.
- The block is given a hash code to make it unique.
Once the block is added to the chain, it becomes public knowledge. In fact, if you visit Bitcoin’s blockchain website, information such as the location, time, and person are available for anyone to see.
As for security, blockchain is considered extremely secure. When a new block is created, it is added to the end of the chain. Once added, the data stored in the block is difficult to change. This is because the block contains both a hash for itself and for the previous block. For a hacker to alter the information, not only would the new block have to be changed, but also every block before it, requiring an enormous amount of time and resources.
Besides currency, blockchains are also being considered for other uses, such as online voting and crowdfunding. Add to that the increasingly popular cryptocurrencies, it is important for people to understand the structure behind these technical operations. Check out this brief video for more information concerning blockchain.
Author: Emily Cieslewicz, IT Tech Assistant
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