Blockchain Explained: The Technology Powering Cryptocurrency

Blockchain is the foundational technology that all cryptocurrencies run upon, including BItcoin.

Blockchain is a distributed ledger where each participant on the network has the same copy of the blockchain and that is updated in real time. The name blockchain is derived from its composition as blocks are used to store transactions meant for processing. These blocks are then chained together in order from the beginning of the network`s birth. This is why the first block on the Bitcoin blockchain is called the “Genesis block”.

How secure is it?

Due to each participant having their own copy of the network and being able to see its entire history, fraud or data corruption is not possible. Miners compete to secure the network by engaging in the consensus process which for Bitcoin is called proof of work. A complex mathematical riddle is presented to the network and the current block of Bitcoins which are included in the block are made up for grabs as the “block reward”. Once a miner makes a successful guess and solves the riddle, the block of transactions is processed across the network and the lucky miner receives the block reward.

This system is set up in such a way that if any malicious actions occur in a given block, the network can decide to ignore and discard this attempt by following the longest active chain with no corruption involved. This reduces both the incentive and the probability of a malicious actor from successfully causing any harm to a blockchain-powered network.

Blockchain today

Cryptocurrencies exist for virtually every industry and this is because blockchain technology facilitates all of this behind the scenes. You can think of blockchain much like we do of TCP / IP that helps run the internet. It’s a protocol that we know is there and key to our everyday life however most of us rarely pay any thought to it because it just works as intended. Blockchain is the same type of innovation and it now powers networks that offer services in finance, identity, governance, tourism, gambling, music, gaming, art and many other industries.

While Bitcoin gets most of the attention it is Blockchain that is the true hero in this story; one of the most important inventions in recent memory. A brand new ecosystem has developed in the past decade due to this one technology that is lowering the barriers of entry into business for people across the world.