When we say the words “block” and “chain” we are actually talking about digital information which is the “block” and it is stored in a public database the “chain”. If you follow cryptocurrencies then you know the term “blockchain” is most commonly used by Bitcoins. But basically blockchain is the future in record-keeping technology, as it is distributed, decentralized, and maintained as a public ledger.
Blocks store information about transactions: date, time, and $ amounts. And the Blocks store information about the transaction. Instead of using your individual names, your purchase is recorded using a unique “digital signature” – a user’s name. Blocks store information to distinguish them from other blocks, and each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms. A single block of blockchain can actually store up to one-megabyte of data depending on the size of the transactions, which means a single block can have a few thousand transactions.
When a block stores new data it is added to the blockchain chain lets say as its name suggests. It consists of multiple blocks connected together in order for a block to be added to the blockchain (5) things have to happen:
- A transaction must occur and in many cases, a block will group together potentially thousands of transactions along with other users’ transaction information.
- That transaction must be verified and this is key: after making that purchase, your transaction must be verified with other public records of information. The same way a bank verifies the funds in your account computers, this is executed by a network of computers vetting data entries. Blockchain does the same and confirms the details of the purchase, including the transaction’s time, $ amount, and participants.
- That transaction must be stored in a block after a transaction has been verified as accurate. The transaction’s $ amount, your digital signature, and the vendor’s digital signature are all stored in the block.
- That block transaction must be given a # hash a code identifying it and the block is also given the hash of the most recent block added to the blockchain. Once both hashed the block can be added to the blockchain.
- When that new block is added to the blockchain, it becomes publicly available for anyone to view and the chain grows.
Given anyone can view the contents of the blockchain users can also connect their computers to the blockchain network as “nodes” and in doing so their computer receives a copy of the blockchain that is updated automatically whenever a new block is added. It works like a news feed that gives a live update.
This is what is meant by blockchain as a distributed public ledger, and each computer in the blockchain network has its own copy of the blockchain. Although each copy of the blockchain is identical, spreading that information across a network of computers makes the information more difficult to manipulate. This is key and with blockchain, there isn’t a single definitive account of events that can be manipulated. Any hackers are challenged to try and manipulate every copy of the network blockchain (on the network) and that is quite a challenge.
The blockchain we know namely cryptocurrency does not have access to identifying information about the users making transactions but these transactions on the blockchain are not completely anonymous and personal information about users is limited to their digital signature.
And the blockchain is or was inundated with lots of miners and that is how I got into Bitcoins. Some are individuals and others are public companies, but for the most part, they have not produced real rewards to investors. And now with half the rewards, it gets worse.
Bitcoin mining is performed by high-powered computers that solve long and complex computational math problems. The work required by a computer to solve one of these problems is the digital equivalent of a real miner striking gold.
The result of “bitcoin mining” is two-fold: first, when computers solve these complex math problems on the Bitcoin network, they produce new Bitcoin, and second, by solving computational math problems, bitcoin miners make the Bitcoin payment network trustworthy and secure, by verifying its transaction information. The future depends on independence and peer-to-peer transactions without the interference of third parties.
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