Simply put, blockchain is a ledger. Sort of a record. What sets it apart is the fact that the data in a blockchain ledger cannot be tampered with. Data once entered cannot be changed.
In slightly technical terms, blockchain is a decentralized peer-to-peer network. Simply put, it’s a shared database; a distributed and immutable ledger.
The blockchain concept was first proposed in 1991 as a research project, years before its first major implementation in 2009 in the case of Bitcoin. Since then, blockchain adoption has accelerated significantly, driven by the creation of various cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts.
How does blockchain work?
Each transaction is recorded as a “block” of data.
Each block is linked to those that preceded it and to those that followed it. The blocks are securely linked together to prevent one block from being modified or placed between two others, and they certify the exact timing and sequence of transactions. Transactions are linked in an irreversible chain which is a distributed ledger system. Each successive block confirms the verification of the previous block, and therefore the entire blockchain. As a result, the blockchain becomes inviolable, giving it the critical strength of immutability.
Double Spending Problem and Need for Blockchain in Cryptocurrencies
Early attempts to create a cryptocurrency, Nick Szabo’s BitGold, faced the problem of double-spending. A double spend occurs when a user tries to spend the same cryptocurrency twice. With an immutable and editable ledger, blockchain has completely eliminated the problem of double spending.
TYPES OF BLOCKCHAIN NETWORKS
The public blockchain
These blockchains are accessible to everyone. This is the case with cryptocurrency blockchains like Ethereum, Solana, etc. Significant processing power is required in public blockchains.
A private blockchain network is a decentralized peer-to-peer network, just like the public blockchain network. Despite this, the network is run by a single organization that selects participants, builds consensus, and manages the shared ledger.
When companies create a private blockchain, they frequently create a permissioned blockchain network. This limits who can access the network and what transactions they can perform. To participate, participants must first obtain an invitation or authorization.
The maintenance of a blockchain can be delegated to several companies. These organizations control who is allowed to submit transactions or access data. Interested participants must request permission and then receive permission.
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What is Blockchain? How Is It Used In Cryptocurrency? – Tech Tribune France
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