What Is A Blockchain? | Crypto Explainer
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Blockchain technology underpins cryptocurrencies such as Bitcoin and Ethereum. But what is a blockchain? A blockchain, at its most basic level, is a list of transactions that anybody can see and verify. For example, the Bitcoin blockchain keeps track of every time someone sends or receives Bitcoin.
Cryptocurrencies and the blockchain technology that underpins them enable online value transfer without the use of a middleman such as a bank or credit card firm. The blockchain, which contains a ledger of transactions, is essential for most cryptocurrencies because it allows secure payments to be made between strangers without the need for a third-party validator such as a bank. Payments via blockchain can be more secure than regular debit/credit card transactions due to the cryptographic nature of these networks. You don’t have to submit any sensitive information while making a Bitcoin payment, for example. That virtually eliminates the possibility of your financial information or identity being compromised.
Blockchain technology is also intriguing since it has numerous applications outside of bitcoin. Blockchains are being utilized, to increase the accuracy of healthcare data, to streamline supply chain networks, and many other applications.
Another way to think about the blockchain is as a ledger (also known as a ‘distributed ledger’ or ‘immutable ledger’) that functions similarly to a bank’s balance sheet. The blockchain, like a bank’s ledger, keeps track of all the money that flows into, out of, and through the network. A crypto blockchain, unlike a bank’s books, is not maintained by any individual or entity, including banks and governments.
It isn’t centralized at all, in reality. Rather, a massive peer-to-peer network of computers running open-source software protects it. The blockchain’s accuracy is constantly checked and secured by the network.
So how does that produce cryptocurrency?
A new chunk of transaction information (or a new block) is added to the chain of existing information every so often — about every ten minutes in the case of Bitcoin. The network rewards participants with a tiny amount of digital cash in exchange for contributing their computing power to the blockchain’s upkeep.
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