Blockchain: what is it?

‘Blockchain’ is a concept central to the innovative Web3 technologies currently disrupting the status quo of traditional industry and institutions. By now you’ve probably heard it mentioned a lot but might still be wondering, “What exactly is it?” Let’s take a quick look at what a blockchain is and why it matters.

According to IBM, “Blockchain technologies represent a fundamentally new way to transact business. They usher in a robust and smart next generation of applications for the registry and exchange of physical, virtual, tangible, and intangible assets.”

All economic activity depends on ledgers of one kind or another. They provide a database of transactions for public or private scrutiny. Distributed ledger technology represents the evolution of traditional ledgers and is what makes blockchain such a powerful new tool for business. Essentially, a blockchain is a database maintained across a peer-to-peer network by sharing (distributing) the ledger amongst its participants whilst ensuring accuracy, trust and accessibility.

So, where do the blocks and chains come in? Well, in order to maintain a truly secure and tamper-evident digital database it’s necessary to update and share the ledger without the data being corrupted by technical mistakes or fraud. Data is recorded cryptographically and distributed to peers across the blockchain network. These peer-to-peer networks can be private or publicly accessible. Every time the database is updated it is released as a block, these blocks are checked and verified by individuals on the network (nodes). Once the updated database is checked and verified by the network participants (through consensus), the block is then confirmed as accurate and up-to-date. The ‘chain’ results from the linking together of these ‘blocks’ of sequential data, thereby creating a reliable, trustworthy record of all previous transactions on the network.