Blockchain is a type of distributed ledger for maintaining a permanent and tamper-proof record of transactional data. A blockchain functions as a decentralized database that is managed by computers belonging to a peer-to-peer (P2P) network. Each of the computers in the distributed network maintains a copy of the ledger to prevent a single point of failure (SPOF) and all copies are updated and validated simultaneously. In the past, blockchains were commonly associated with digital currencies such as Bitcoin, or alternate versions of Bitcoin like Bitcoin Cash. Today, blockchain applications are being explored in many industries as a secure and cost-effective way to create and manage a distributed database and maintain records for digital transactions of all types. How blockchain works A blockchain ledger consists of two types of records, individual transactions and blocks. The first block consists of a header and data that pertains to transactions taking place within a set time period. The block's timestamp is used to help create an alphanumeric string called a hash. After the first block has been created, each subsequent block in the ledger uses the previous block's hash to calculate its own hash. Before a new block can be added to the chain, its authenticity must be verified by a computational process called validation or consensus. At this point in the blockchain process, a majority of nodes in the network must agree the new block's hash has been calculated correctly. Consensus ensures that all copies of the distributed ledger share the same state. Once a block has been added, it can be referenced in subsequent blocks, but it cannot be changed. If someone attempts to swap out a block, the hashes for previous and subsequent blocks will also change and disrupt the ledger's shared state. When consensus is no longer possible, other computers in the network are aware that a problem has occurred and no new blocks will be added to the chain until the problem is solved. Typically, the block causing the error will be discarded and the consensus process will be repeated. Continue reading... |
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