What Is A Blockchain?
A Blockchain is a distributed ledger that is shared between a network of computers – more commonly known as nodes. Picture a network of 100 nodes that are all connected together and all of them have an identical copy of the distributed ledger.
This allows for decentralization because if one of the nodes was to act fraudulently, go down, or disconnect from the network you would still have 99 nodes keeping the network up and running. This keeps the network both reliable and secure, thanks to the benefits of decentralization.
The ledger is organized into blocks of transactions and/or information. Every few minutes a new block is created and all of the transactions that take place in that timeframe are added to that block, that block is then checked by all of the nodes to be sure everything matches up, and then once the nodes reach consensus, meaning the majority of the nodes agree that the block is legitimate, it is then added to the ledger, and the next block is created and so on.
Because every node has a version of the ledger, every time a new block of information is added to the ledger or something in the ledger is changed, all of the nodes can check it to be sure it’s legitimate.
Additionally, the ledger is immutable meaning once a block is added to the chain, the information in it cannot be tampered with, in the case of a node trying to change something unlawfully, all of the other nodes would recognize it and the fraudulent node would be terminated from the network. This makes the blockchain an ultra-secure network.
There are 3 key components that make up a blockchain
- Consensus: the mechanism by which the nodes on the network reach agreement on the verification of new blocks, and updates to the network.
- Data availability: the ledger which stores the entire history of the blockchain.
- Execution: the mechanism which executes the transactions on the network.
