A blockchain is a decentralized, immutable, incorruptible, digital ledger for recording the history of (economic) transactions like cryptocurrency transactions, contracts, land records, digital identities, notarized academic records etc.
The digital ledger is distributed between many parties (computers termed “Nodes” connected to the blockchain network using a client software that performs the task of validating and relaying transactions) and can only be updated by the consensus of a majority of participants in the system.
While the first block of the blockchain is called the Genesis Block, the blockchain constantly grows as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order and allows the participants to keep track of every single transaction in a verifiable manner without central recordkeeping.
Each subsequent block added further increases the security of the previous blocks.
The timestamp feature of blockchain allows the whole network to validate the state of the wrapped piece of data (called a hash) at any particular time.
Steps involved in a blockchain transaction:
- A participant in the network requests a transaction.
- The requested transaction is broadcast to the peer-to-peer network.
- The network of nodes validates the transaction and the user’s status using pre-defined algorithms.
- A verified transaction is combined with other transactions to create a new block of data for the ledger.
- The new block is then added to the existing blockchain in a permanent and unalterable way.
- The transaction is complete.
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