If you have heard of Cryptocurrencies, then you probably must have heard about the term Blockchain. But what exactly is the Blockchain, what is it all about and how does it work? Follow us as we unravel this technology to you in the simplest terms possible. Blockchain technology is known to be the pillar behind the Cryptocurrency space, put in clear terms, the Blockchain is a decentralized, immutable register of blocks which contains batches of valid records or transaction details. Each block is linked to the other using
cryptography and each block contain a transaction hash reference to the previous block.
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This linking is what constitutes a chain of blocks, hence the name Blockchain. Due to its design, the Blockchain is resistant to modification of already stored data. Simply put, it is an open-source, distributed ledger that has the capacity to store transaction details between two parties efficiently, in a permanent and verifiable manner. As said earlier, the Blockchain is literally a linked chain of blocks. In order for a block to be added to the chain, four things must occur;
1. A transaction must have occurred; since a block simply contains a batch of transaction information, for a block to even exist, there must have been a transaction between two parties.
2. The transaction must be verified; when the transaction occurs, a network of computers rushes to validate if the transaction happened as you have stated. They confirm the details of the transaction like the transaction’s time, the amount and the participants. This is usually completed within a few seconds at most.
3. The transaction must be stored in a block; once the transaction has been verified to be authentic, accurate and legit, the network of computers then gives the green light. Your transaction information and the digital signatures of both parties involved are then stored in a block along with tens, hundreds, or even thousands of other similar transactions.
4. The block must now be given a hash; once all of the transactions in a particular block have been verified, the block is given a unique identification and reference code called a hashcode. The block is also embedded with the hashcode of the most recent or previous block which has been already added to the Blockchain. Once this process is completed, the new block can now be added to other blocks on the Blockchain. When this happens, the block becomes publicly available for anyone to view—including you but can no longer be altered or reversed in any way. This is literally how the chain of blocks is created, hence the name Blockchain.
Though Blockchain was conceptualized by Satoshi Nakamoto (a person or group of persons) in 2008 to serve as the technology to power Bitcoin, the world’s first fully decentralized cryptocurrency, the revolutionary technology has today been integrated in multiple areas. These areas include but is not limited to; smart contracts, financial services e.g. banking, video gaming, peer-to-peer energy trading, supply chain management, domain name registration, music distribution and online voting.
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