The blockchain is a secured protocol enabling peer-to-peer exchanges on a distributed network in a secured, public, and non-repudiable way.
Some of the main features of blockchain and differences from other databases include:
Decentralization of information storage and processing.
Verifiable data immutability.
Transparency of transactions, which means that the content of transactions in public blockchains can be viewed by all network participants.
Irreversibility of transactions, which means that the blockchain is a kind of logbook that stores all data chronologically and irrevocably.
Possibility to anonymize the participants.
No third party / organization required for trust.
The blockchain is therefore a type of distributed ledger technology that has gained popularity in recent years. It uses decentralized, immutable, and secure data structures to store information across multiple nodes. Blockchain has the potential to transform industries by increasing transparency and security for online transactions. Each transaction within the blockchain is cryptographically secured, making it highly secure from tampering or hacking attempts. Blockchain is for example utilized as a platform for smart contracts, which are automated agreements with programmed logic that can self-execute when specific conditions have been met.
Blockchain works by creating a shared database of transactions that are secured using cryptography, without the need for third-party verification or oversight. It stores all information related to any given transaction in an organized manner, providing all users with access to the same data at all times, and ensuring no single user has control over the entirety of the system. As each block contains a cryptographic hash of the previous block, any attempt to alter data stored within the blockchain would be immediately detected and prevented from happening. Blockchain enables peer-to-peer transactions without intermediaries such as banks or governments to facilitate them, making transactions much faster than traditional methods and eliminating unnecessary costs associated with such transactions.
There are four essential components of blockchain technology that help it run smoothly and securely: a distributed ledger, a consensus mechanism, network nodes, and cryptographic keys. A distributed ledger is a database shared across multiple nodes in a blockchain network. The consensus mechanism is an integral part of blockchain technology that enables distributed networks to agree, without the need for a central authority. Network nodes are the computers that store, validate, and relay information on a distributed ledger. Finally, cryptographic keys are used to securely encrypt information, granting only authorized access to digital assets. Cryptographic keys come in two forms: public key and private key, and they are generated from complex algorithms.
Read more about the blockchain and its potential use cases on the following blogposts:
Blockchain Reality – For which Applications is Blockchain useful?
and more about decentralized applications, aka dApps you can read here:
Blockchain and decentralised Applications
