Knowing the blockchain concept is really important if you are thinking about start getting into cryptocurrencies. It’s a technology that makes the crypto revolution possible and is one of the most intelligent systems there are to review transactions.
Basically, a blockchain is a database, a register that keeps track of all the transactions that users have made with intangible goods. It’s necessary to provide another layer of protection to the transactions do with their money in crypto.
The thing is, all of the transactions made with certain crypto working with a certain blockchain will be public. This means that literally, everyone can see what you did with your money.
To put it simply, this means if there is some kind of scam or something that is a little of people will quickly notice. There is the security, is almost impossible to scam or double-spend funds without anyone actually noticing.
It would be like trying to rob a bank full of police officers, something insane. This is a really archaic explanation, but that can make you understand the function of a blockchain in general.
What is an example of blockchain?
It’s very interesting to see how a blockchain works, first, what does a “block” content?
Taking as an example Bitcoin’s blockchain, a block contains the following:
- Data: The bitcoin blockchain contains the details of a transaction, the sender, receiver, and the number of coins. The information on the data can change depending on the type of blockchain it is, blockchains are not just for cryptocurrencies!
- Hash: A hash is a unique ID that is used to identify a block itself, and all of its contents. This means that if something changes inside the block the hash will change as well, so you can detect the changes on the block!
- Hash of the previous block: This is where we understand why we use the term “block-chain” all blocks point at another block. Magic happens here, if a block is tampered with by a person to scam, the hash will change now. The problem is that now that this blockchain is changed, the next black will reveal that previous hash and it won’t be the same.
What is blocks technology used for?
Basically, this is an infinite register, a block is created every time there is a transaction. And every block is connected to the other, forming a chain. When you compare the data of one block to the following block, data has to match perfectly.
Otherwise, you will instantly know something weird has happened here. So, if you want to successfully change a block for some reason, you will have to change the next one, and the next one, and the next one…
In conclusion, a blockchain is a security system, something that will tell you if things are going well in real-time. It’s a pretty smart, simple, yet effective system, that leaves no margin for mistakes, now that you know this, sure you feel a lot more secure!
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