Have you ever thought to yourself:
What even is a Blockchain?
I remember thinking that very question not too long ago and I dove head-first into a Google search. On my journey to figure out what a Blockchain is, I came across a slew of academic and technical papers, even the original Bitcoin paper detailing how Bitcoin would work. That was all fine and well, but what I needed was something simpler.
I needed someone to explain it to me like I had no idea what it was let alone things like Decentralization, Consensus Mechanisms, Hash functions, and more technical lingo.
Thankfully, the internet is full of incredibly smart and gifted individuals who make it their duty to help others learn about new, emerging technology.
To save you some time and to reinforce my own understanding, the following is my attempt at answering “What is a Blockchain?” in a succinct and clear way.
It’s almost as if I’m traveling back in time to explain it to myself before I did hours upon hours worth of research. This is how I wish I had it explained to me when I first started.
So, without further Adieu,
A blockchain is a linked list of transactions (data) stored on a network of computers.
A Block is basically just a bunch of data, usually a collection of records like transaction records, arranged one after another, and each new block references the previous block’s data.
Hence the term “BLOCK – CHAIN”.
Another way of putting it is that a Blockchain is:
Chunks of data, where each chunk/block references the previous chunk of data, aligned in a sequential Chain.
Pretty simple so far!
Let’s look at what a block is.
Each block has:
✅ A list of Transactions
✅ A hash (a long string of random characters) for the block
✅ The previous block’s hash (this is how the block’s are linked!)
Remember when I mentioned the data is stored on a network of computers?
That’s called Decentralization.
It also means that no single person or group has complete control over the Blockchain because the data from the Blockchain is distributed across several computers that may or may not be geographically separated as well.
With all that said, how do you get all these different computers to agree on one single set of data being the absolute truth?
This brings us to Consensus Mechanisms!
For each new block generated from new data being added to the blockchain, the computer network needs to come to an agreement and confirm (or deny) that the data in the new block being generated is accurate/true.
This consensus among various computers in the network is crucial.
Different Blockchains have different ways of confirming the data in each new block, but all Consensus Mechanisms serve the same fundamental purpose of finding the truth/accurate data.
Here are some Consensus Mechanisms:
👉 Proof of Work (POW)
👉 Proof of Stake (POS)
👉 Proof of Authority (POA)
👉 Proof of History (POH)
👉 Directed Acyclic Graph (DAG)
These are just a few different ways in which blockchains confirm data being appended to the blockchain.
Why are there so many different ways to confirm data?
Because each Consensus Mechanism has a trade-off.
For example, some can validate data being added faster than others, and some can store more data in each block than others.
Each Blockchain chooses which Consensus Mechanism is most advantageous for the chain.
And this difference in various Consensus Mechanisms is one of the many ways and reasons behind why there are so many Blockchains.
In our Next Blockchain 101 Blog Post, we will cover the differences between Layer1 and Layer2 Blockchains. This will help us understand how Blockchains can scale and service more users on the network.
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👉 DEX’s & CEX’s
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👉 Layer1’s and Layer2’s
👉 Blockchain Use Cases
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