What is Blockchain?


The Basics

There are some different ways to wrap your head around blockchain, from straightforward definitions to far-reaching metaphors. In the simplest explanation, a block is a record of new transactions. Once each block is completed, it's added to the chain, creating a chain of blocks: a blockchain.

Structure


Blocks: Blocks contain batches of valid transactions that are hashed and encoded into the chain. In each block includes the cryptographic hash of the prior two. This is how the chain remains linked and linear. If separate blocks are created concurrently, it's no problem! A temporary fork is created in order to accomodate this. However, only one of these blocks in the temporary fork is chosen to be part of the chain. The other block becomes an orphan block, hanging onto its forked block. In the diagram to the left, the purple blocks are the orphan blocks.

Blocktime: The block time is the average time it takes for the network to generate one extra block in the blockchain. Some blockchains create a new block as frequently as every five seconds. By the time of block completion, the included data becomes verifiable. In cryptocurrency, this is practically when the money transaction takes place, so a shorter block time means faster transactions. The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it is 10 minutes.

Decentralization: By storing data across its network, the blockchain eliminates the risks that come with data being held centrally. Its network lacks centralized points of vulnerability that computer crackers can exploit; likewise, it has no central point of failure. Blockchain security methods include the use of public-key cryptography. A public key (a long, random-looking string of numbers) is an address on the blockchain. Value tokens sent across the network are recorded as belonging to that address. Data stored on the blockchain is generally considered incorruptible.

Learn More

Want more in-depth definitions? Visit Wikipedia or Investopedia.


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