Learn about the fundamentals of blockchain technology and how it can improve the trustworthiness of records and financial transactions. Blockchain is a method of storing data in such a way that it is difficult or impossible to alter, hack, or cheat it.
A blockchain is a digital log of transactions that is duplicated and distributed across the blockchain’s complete network of computer systems. Each block in the chain contains a number of transactions, and each time a new transaction takes place on the blockchain, a record of that transaction is added to the ledger of each participant. Distributed Ledger Technology is a decentralized database that is administered by various people (DLT).
Blockchain is a sort of distributed ledger technology in which transactions are recorded using a hash, which is an immutable cryptographic signature. This means that if a single block in a chain is modified, it will be immediately clear that the chain has been tampered with. Hackers would have to change every block in the chain, across all distributed versions of the chain, if they intended to destroy a blockchain system. Blockchains like Bitcoin and Ethereum are constantly growing as new blocks are added to the chain, increasing the security of the ledger dramatically.
Why is blockchain technology generating so much buzz?
Many attempts to generate digital money have been made in the past, but they have all failed. The most pressing issue is one of trust. How can we believe that if someone invents new money called the X dollar, they won’t give themselves a million dollars or steal your X dollars? Bitcoin was created to address this issue by utilizing a blockchain, which is a type of database. A person in control of most regular databases, such as a SQL database, can make changes to the entries (e.g. giving themselves a million X dollars). Blockchain is unique in that no one is in charge; instead, the individuals who utilize it run it. Bitcoins can’t be faked, hacked, or double-spent, so those who own them can be confident that they’re worth so much money.
