What is blockchain?

PW Editor author
Published 2021-12-01
What is blockchain?

Blockchain is a special kind of database in which data can only be entered, not deleted or changed. Transactions within so-called blocks (consisting of transaction information and other metadata) are periodically added to the blockchain.

Such a structure is called a chain, because the metadata of each block includes some of the information from the previous one and links the blocks together. In particular, it includes the hash of the previous block, which acts as a unique digital fingerprint.

The chances that two pieces of data will give you the same hash function result is incredibly small. That is, if someone tries to change the old block, its hash will also change, which means that the hash of the next block will also be different, and so on. Therefore, it is very easy to understand whether a block has been changed, because all the blocks following it will also be changed.

Decentralization

It is important to note the need to fully download the blockchain to the participant's drive. Remember when we said that anyone can validate (verify) transactions and signatures using public key cryptography? When a node receives a block, it performs a series of checks; if something is invalid, the block is rejected.

When a node receives a valid block, it copies it and distributes this block to other nodes. They, in turn, do the same until the block spreads across the entire network. The same process is performed for unconfirmed transactions, that is, those that have been announced but have not yet been added to the blockchain. In particular, this is how BTC (bitcoin) works: https://nsbroker.com/bch-usd