What is Blockchain?
Blockchain is a decentralized database that stores distributed information over a computer network. This data can be anything from crypto transactions to contracts and votes. Each block in the blockchain also has a unique identifier, called a “hash,” a long string of characters that acts like a fingerprint. Blocks are created randomly and verified by the nodes of the network to prevent people from changing old blocks and compromising the security of the blockchain. When a new block is created, it contains the hash of the previous block, forming a continuous “chain” of traceable transactions.
The blockchain network has no central authority – it is the definition of a democratized system. The stored information is open to everyone as it is a shared network. Consequently, everything that arises on the blockchain is visible and easily verifiable, and all participants are individually responsible for their actions.
Traditional intermediaries such as banks or governments often make decisions that can be biased and centralized and sometimes censor information. Blockchain technology makes intermediaries unnecessary by providing a distributed database that can be accessed in real time. The inputted data cannot be altered, making the system transparent and secure.
Although the blockchain was developed for tracking Bitcoin transactions, its applications go beyond cryptocurrencies. Today, the technology is used for exchanging digital assets, smart contracts, identity management, and tracking data in healthcare, among others.
In summary, the three key characteristics of blockchain are: decentralization, transparency, and immutability.