Blockchains and cryptocurrency are part of the most used words in our world today. Although it is known for its role in the cryptocurrency system, it has several other functions.
Cryptocurrencies such as Bitcoin and Ethereum have their networks based on blockchain. It is therefore important to know how the blockchain works.
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What is Blockchain?
A blockchain is a distributed database that is shared among the nodes of a computer network. It is a type of shared database that is different from a typical database in the way its store’s information. Blockchain stores data in blocks that are then linked together via cryptography.
Blockchain can be used to store different types of information but the most common use so far has been as a ledger for transactions.
A blockchain collect information together in groups known as ‘’block’’. They hold set of information when this block reach their storage limits, they are closed and linked to the previously filled block, forming a ‘’Chain’’ of data hence the name ‘blockchain’.
Things To Know About Blockchains
1. Blockchain allows digital information to be recorded and distributed. The data in any given block cannot be altered retroactively without altering all subsequent blocks.
2. Although it was first proposed in 1982, blockchain was popularized when Satoshi Nakamoto’s Bitcoin debuted in 2009.
3. Blockchains are involved in the creation of thousands of cryptocurrencies, decentralized finance (DeFi) application, Non-fungible token (NFT) and smart contracts.
4. There are currently four types of blockchain. They are public blockchains, private blockchains, consortium blockchains and hybrid blockchains. Private blockchains have been proposed for business use.
5. The technology is yet to be altered as system that guarantees the fidelity and security of a record of data and generate trust without the need for a trusted third party like central bank.
Also Read: Link Between Blockchain and Cryptocurrency
Blockchain has several uses out of which its part in the creation of cryptocurrencies make it popular. The understanding of how cryptocurrency works is necessary while dealing with crypto assets.
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