What is Blockchain?
It is quite possible that you might have heard the word Blockchain in reference to the cryptocurrencies. Blockchain technology is the most important element behind the cryptocurrencies, and without it, currencies like bitcoin wouldn’t have existed.
Blockchain is basically a record-keeping technology behind bitcoin: it includes all the information related to the exchange of cryptocurrencies. To understand Blockchain clearly, we will have to first know about its history.
The History of Blockchain
Blockchain technology is much older than the cryptocurrencies. The very first form of Blockchain was called the hash tree (also Merkle tree). It was patented by Ralph Merkle in 1979, and was used for verifying and handling data between the computers: such verification was important to ensure that nothing had been changed during transfers.
Then in 2008, a person or group of people under the pseudonym Satoshi Nakamoto, made Blockchain popular by using it to create Bitcoin. Blockchain was basically responsible for the accounting of bitcoin, including a secure history of data exchanges, a peer-to-peer network to verify and time stamp each transaction and it was managed autonomously with no central authority.
Blockchain = block + chain
The meaning of Blockchain is somewhat evident from its name, i.e., it is a chain of blocks which are digital pieces of information storing information on the digital transactions, like the date, time, amount and who is participating in the transactions. However, instead of actual name, it records the identity information using a unique “digital signature,” something like a username.
Moreover, each block carries its own unique code – called “hash” – to distinguish it from other blocks.
A single block can include about 1MB of data. It means that one block can store about thousands of transactions.
How it works?
For a block to be added to the Blockchain, there has to be at least one transaction in it. Also, that transaction must be verified. For Blockchain, the verification part is handled by the network of computers across the globe. So, when a transaction is made, these computers verify the details, like time, date, amount and participants.
Once, the transaction is verified, it gets stored in the block. Next, the block gets the hash (a unique code) after all its transactions have been verified. Once the block is hashed, it is chained to other blocks, and thus, you get Blockchain.
The above description of the Blockchain is just a simple explanation of this vast subject. Actually, uses of Blockchain go far beyond bitcoin and cryptocurrencies. In fact, it has the potential to power almost every segment.