Throughout the past decade, blockchain technology has gone from a new financial experiment with a cult following, to a potential revolutionizer of data management. As blockchain has gained more and more traction, many people still struggle to understand: what exactly is blockchain? And why would anyone want to use it? In this series, we answer those very questions and provide the foundation needed to understand blockchain and cryptocurrency.
A public blockchain is a decentralized, distributed ledger. In other words, it is a secure public database. You can think of blockchain as a new way to securely store information. In our last post, we discussed some of the key characteristics of a public blockchain.
A blockchain is composed of data “blocks” linked together by cryptography “chains.” Cryptography is an encryption process that protects data. When a new block is created, it is tethered to the entire existing chain. This makes it very difficult to alter the data. If a hacker wanted to change the data in one block, they would effectively need to alter the entire chain. Blockchains are governed by underlying rules called protocols.
Typical networks store data in one central server. Blockchain stores data in a peer-to-peer network (P2P) where data is shared by multiple devices. Since data is shared across multiple devices it makes it more difficult to disrupt. Shutting down one device would not cause the entire network to fail. Each electronic device that makes up the blockchain network is called a node. Nodes use consensus protocols to verify and add new information to the blockchain.
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