Blockchain is a specific sort of database which differs from a typical database. It stores data in the form of blocks that are then chained together. As new data comes in, it's entered into a fresh block. Once the block is crammed with data, it's chained onto the previous block, making the info chained together in chronological order.
Different data types are often stored on a blockchain, but everyday use has been a ledger for transactions.
For cryptocurrencies, blockchain is used in a decentralized way where no single person or group has control—instead, all users collectively retain control.
Decentralized blockchains are immutable, which suggests that the info entered is irreversible. For Bitcoin, this suggests that transactions are permanently recorded and viewable to anyone.
What is Blockchain?
Blockchain seems complicated, and it is, but its core concept is quite simple. A blockchain may be a sort of database. To be ready to understand blockchain, it helps first to understand what a database is:
A database is a collection of data that are stored electronically on a computing system. In databases, information, or data, is usually structured in table format to permit easier searching and filtering for specific information.
Blockchain includes the following features which differ from the typical database:
Storage Structure
It is one of the critical differences between a typical database and a blockchain. A blockchain stores information in groups also referred to as blocks, that hold sets of data. Each block has a specific storage capacity and, when filled, is chained onto the previously filled block, forming a sequence of knowledge referred to as the "blockchain." New information that is freshly added is compiled into a newly formed block that will then be added to the chain once filled.
This technique also inherently makes an irreversible timeline of knowledge when implemented of a decentralized nature. When a block is filled, it's set in stone and becomes a neighborhood of this timeline. Each block within the chain is given a particular timestamp when it's added to the chain.
Decentralization
To understand blockchain, it's instructive to look at it within the context of how it's been implemented by Bitcoin. Every computer or group of computers is operated by a singular individual or group of people.
Imagine that a corporation owns a server comprised of 10,000 computers with a database holding its client's account information.
In a blockchain, each node features a complete record of the info that has been stored on the blockchain since its inception. If one node has a mistake in its data, it can use the thousands of other nodes as a point of reference to correct itself. So no node within the network can alter information held within it. The history of transactions in each block that structure Bitcoin's blockchain is irreversible.
Transparency
Because of the decentralized nature of blockchain, all transactions are often transparently viewed by either having a private node or by using blockchain explorers that allow anyone to ascertain transactions occurring live. Each node has its copy of the chain that gets updated as fresh blocks are confirmed and added. It suggests that if you wanted to, you'd track Bitcoin wherever it goes.
For example, exchanges are hacked in the past were those that held Bitcoin on the exchange lost everything. While the hacker could also be entirely anonymous, the Bitcoins that they extracted are easily traceable. If the stolen Bitcoins in many of these hacks were to be moved or spent somewhere, it might be known.
Security of Blockchain
Blockchain technology has encountered several issues related to security. New blocks in the structure are always stored linearly and chronologically. That is, they're continuously added to the "end" of the blockchain.
When a block has been added to the top of the blockchain, traveling back to the previous blocks and alters, the content is challenging. That's because each block contains its hash alongside the block's hash before it. Hash codes are based on a math function that translates digital information into a number or letter string. If that information is altered in any way, the hash code changes accordingly.
Here's why security is essential:
Let's say a hacker wants to change the blockchain and steal Bitcoin from everyone else. For changing a single copy, it might not align with everyone else's copy. When everyone else cross-references their copies against one another, they might see this one copy stand out, which hacker's version of the chain would be discarded as illegitimate.
Succeeding with such a hacking process would require that the hacker simultaneously control and alter 51% of the blockchain copies so that their new copy becomes the bulk copy and the agreed-upon chain.