What is Blockchain?
Blockchain seems complicated, and it definitely can be, but its core concept is really quite simple. A blockchain is a type of database. To be able to understand blockchain helps to first understand what a database actually is.
Blockchain is a method of storing information in such a way that it is difficult or impossible to modify, hack, or trick the system. It is a database type. To be able to understand blockchain helps to first understand what a database actually is.
A database is a collection of data saved on a computer system in an electronic format. Database information, or data, is usually organized in table style to make searching and filtering for specific information easier.
Although the original blockchain was meant to function without a central authority (i.e., no bank or regulator deciding who may transact), transactions must still be verified.
Cryptographic keys, a string of data (like a password) that identifies a person and grants access to their “account” or “wallet” of value on the system, are used to do this.
Each user has their own private key as well as a public key that is visible to everyone. Using both of these produces a secure digital identity that can be used to verify the user via digital signatures and to ‘unlock’ the transaction they wish to conduct
Once a transaction is agreed between users, it needs to be approved or authorized before it can be added to a block in the chain. For public blockchains, the decision to add transactions to the chain is made through consensus. This means that most “nodes” (or computers in the network) must agree that the transaction is valid. Those with computers in the network are incentivized to verify transactions through rewards. This process is called “Proof of Work”.
Proof of Work
Proof of work requires the person who owns the computer in the network to solve a complex mathematical problem to be able to add a block to the chain. Solving this problem is called mining, and “miners” are usually rewarded for their work in cryptocurrency. But mining is not easy. Mathematical problems can only be solved by trial and error, and the probability of solving the problem is about one in 5.9 trillion. It requires a lot of computing power that uses a lot of energy.
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