For the past 10 years if you have been following, investing, or reading about the cryptocurrencies you may have heard about the buzz word “blockchain.” This is the groundbreaking technology behind the legendary Bitcoin network.
Then what is Blockchain?
Blockchain is made of a chain of blocks. If we look at the two words separately “the block” refers to digital information and the public database “the chain” is where the information is stored. These blocks are made of digital pieces of information and there are three main parts.
Part one: Information stored in blocks concerning the transaction, such as value, time, and date. This can be the most recent transaction from a cryptocurrency exchange.
Part two: Information stored in blocks concerning the parties involved in the transaction. This can be you and cryptocurrency exchange details, instead of names the blockchain stores the digital signatories.
Part three: Information unique for each transaction. This information is helpful to identify the different transactions. Each block will store a different unique code which is called a “hash.”
As mentioned in the above example block can store up to 1 MB of data so in the real world depending on the transaction size block can store one or more transactions in each block.
How Blockchain works?
When a block stores data and added to the chain of blocks new data is created on the blockchain. However, block to be combined with the blockchain must fulfill a few factors. There should be an occurrence of a transaction. Verification of the transaction will be done with other public data available on the blockchain. This verification will be done by a network of computers. This process will be done in seconds. After the verification process is completed this information will be then transferred to a block and stored. Information such as digital signatures, dollar amounts, time, will be stored in the block. Then a unique code or hash will be given to the block and will be added to the blockchain. The new unique block added to the blockchain will be available in public for anyone to view.
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