What is a blockchain Technology?

What is Blockchain technology?

In recent years, especially in discussions about cryptocurrencies, the term "blockchain" has become quite common. Let us break it down and understand its basics.

The term "blockchain" is derived from two words: "block" and "chain." The technology behind it stores transaction data in individual blocks that are linked together in a chain-like structure. The concept was first introduced by Satoshi Nakamoto, the pseudonymous creator of Bitcoin, in a 2008 paper. Although Nakamoto initially referred to "block" and "chain" as separate entities, the two were later combined to form the term "blockchain."

In simple terms, blockchain is a digital ledger that records and shares information in a decentralized, public, and distributed manner. This is why it is also referred to as Distributed Ledger Technology (DLT).

How Does Blockchain Work?

Data stored in "blocks" means that individual blocks of information are created first. When a transaction takes place, it is recorded as a block of data. Each block is then connected to the previous one, forming a continuous chain. Once a block is added, it cannot be altered or deleted without affecting all the preceding or subsequent blocks. Every block has its own unique hash code, which also contains the hash of the block before it.

This design makes tampering with data in a blockchain incredibly difficult. To alter or erase any information, a hacker would need to change the data across thousands of interconnected blocks, which is virtually impossible.

Blockchain Beyond Cryptocurrency

Although blockchain gained prominence due to its role in cryptocurrency, it is being adopted by other industries, including real estate, insurance, and logistics. While the technology can be expensive, industries that prioritize security are starting to implement it, and over time, its use is expected to expand to more sectors.

By maintaining data integrity and security, blockchain is reshaping the way industries manage transactions and records.

Know Your Basics Series – Article 45

Source: https://www.investopedia.com/terms/b/blockchain.asp