Blockchain

Written by Max Hinchman

Introduction

Blockchain is a form of distributed ledger technology that that was introduced in the Bitcoin white paper (despite the word "blockchain" not being used). Distributed ledgers are databases that are shared by multiple participants in a network to eliminate the need for the need of a “trusted” central party to maintain and update entries of the ledger. Blockchain derives its name from how the distributed ledger validates new transactions and links it to previous transaction from the network. The ledger is controlled by a peer to peer network of nodes that maintain and verify all transactions recorded on the blockchain.

Bitcoin uses proof-of-work to decide which node gets to add the next block. Whenever a new transaction is broadcast to the bitcoin network, the miners hash the transaction data, the nonce, and previous block’s hash into a new block of data. Once the first miner finds the newest valid block, the new block is added to the chain of previous blocks of transactions. All active participants have access to the most updated chain of transactions. While networks differ on how the blocks are created and added, the end result for all blockchain networks is that a new data block is linked together with previous data blocks.

Suggested Reading

How does the blockchain work? by Collin Thompson

What is Blockchain Technology? A Step-by-Step Guide For Beginners by Ameer Rosic