Crypto seems to be the hot topic in financial circles currently, and a major part of cryptocurrency is blockchain technology. This technology is essential for cryptocurrency to operate, but what is it?
A blockchain is a ledger that is distributed and shared amongst a computer network. Whilst the technology is used in a variety of industries, blockchains are most commonly associated with maintaining a secure and decentralised record of cryptocurrency transactions.
This decentralisation is paramount to the operation of blockchain. A decentralised database that is managed by multiple persons is known as Distributed Ledger Technology (DLT). Decentralised blockchains are immutable. This means that any information entered is irreversible, and in crypto, all transactions that occur are permanently recorded and viewable.
The major difference between standard databases and blockchain is the way the data is structured. A blockchain collects information together into groups, which are known as blocks. These blocks hold sets of information. Blocks have specific storage capabilities, that when they are filled, they are closed and linked to the previously filled block. These blocks form a chain of data, known as a blockchain.
Due to the irreversible nature of the information entered into a blockchain, information is more secure. Whilst the technology is not immune to hacking attempts, the reality is that decentralisation gives blockchain an added line of defence. If a hacker wanted to alter any piece of data within the chain, they would need to gain control of more than half of the computers in the same distributed ledger, making a successful attempt impossible.
Blockchain security is unique as the more people involved in storing the information, the more secure it is. This is in direct opposition to typical methods of storing data, where you’d limit the number of people who can access the data.
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