What is Blockchain?
Glossary, Guides, Infrastructure
Do you exactly know what is blockchain? By now, you might have heard of Bitcoin and how it is breaking records, trading at over $40k.
Bitcoin is one of the many cryptocurrencies running on a public blockchain.
But then, what exactly it is?
It is a decentralized digital ledger that can store any data. It can be summarized as a “chain” comprising many “blocks” of data. The keyword here is decentralized. Without this property, a blockchain would be like any other centralized database.
New blocks continuously update the chain. Once a block of data is confirmed to contain valid data by nodes holding a copy of the database, it is “added” to the chain. Afterward, nodes automatically update so that they all contain the same data.
Blockchain stands out because its database decentralization allows users to store transaction details, NFT files, and more. Meanwhile, its data is private by default because of cryptography.
A blockchain is a decentralized digital ledger for storing any data. This technology powers most cryptocurrencies like Bitcoin and Cardano but has voting, banking, and more applications. Learn more about the blockchain: Click To TweetA new “block” of data can only be added to the chain if most node operators agree. The process of confirming whether a given block’s data is valid or not is called consensus. Different blockchain networks employ various techniques for block confirmation. Bitcoin uses a Proof-of-Work consensus algorithm while Cardano—and most modern networks—uses the Proof-of-Stake method—which is more energy-efficient.
Operating a node in a public blockchain is resource-intensive. For this reason, node operators are incentivized. Whenever they confirm a given block, they receive a reward. In Ethereum, the network releases 3 ETH for every 12-14 seconds to node operators.
It has applications beyond cryptocurrencies. This technology can be used in banking for minting central bank-backed currencies, voting, supply chain monitory, asset transfer and management, smart contracting, and much more.
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Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies.
