The World's Most Powerful Technology

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What is Blockchain Technology?

Blockchain defined: Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets on the network. An asset can be tangible (land, property, gold, cash) or intangible (bonds, digital goods, NFT's, IP's, copywrites). Almost anything of value can be tracked and traded on a blockchain network, reducing risk and costs for everyone.

How Blockchain Technology Works

For proof-of-work blockchains, this technology consists of three important concepts:

Blocks

Every chain consists of multiple blocks and each block has three basic elements:

The data in the block.
The nonce — “number used only once.” A nonce in blockchain is a whole number that’s randomly generated when a block is created, which then generates a block header hash.
The hash — a hash in blockchain is a number permanently attached to the nonce. For Bitcoin hashes, these values must start with a huge number of zeroes (i.e., be extremely small).

Nodes

Nodes are network stakeholders and their devices authorized to keep track of the distributed ledger and serve as communication hubs for various network tasks. In short, nodes do the following:

determine whether or not a block of transactions is legitimate and accept or reject it.
save and store transaction blocks (storing blockchain transaction history).
transaction history is broadcast and disseminated by nodes to other nodes that may need to synchronize with the blockchain

Miners

Blockchain Miners create new blocks on the chain through a process called mining.

Mining consists of:

special software/hardware to solve incredibly complex math problems.
Verify transactions on the network by finding the nonce that generates an acceptable hash.
Protect the blockchain from being manipulated through peer to peer verification.

What Is Decentralization in Blockchain?

One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Blockchain nodes can be any kind of electronic device that maintains copies of the chain and keeps the network functioning.

Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. Since blockchains are transparent, every action in the ledger can be easily checked and viewed, creating inherent blockchain security. Each participant is given a unique alphanumeric identification number that shows their transactions.

Combining public information with a system of checks-and-balances helps the blockchain maintain integrity and creates trust among users. Essentially, blockchains can be thought of as the scalability of trust via technology.

Bitcoin

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Ethereum

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Litecoin