A blockchain is a list of records referred to as blocks that are interconnected through cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction information. Utilizing blockchain, users can safely store data over a transparent shared system for anyone to see, but users cannot alter the record retroactively.
A blockchain tracks all new information on something called a ledger, and it uses a distributed system to verify every change made to the ledger. By design, a blockchain is resistant to the modification of its data.
The blockchain is utilized to safely exchange things like cash, property, and contracts without requiring a third-party intermediary like a bank or a government. Unlike a traditional banking system where no client has access to another client's transactions, a blockchain permits all clients worldwide to access to see another client's transactions.
A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. This process involves the participation of multiple computers all over the world, referred to as nodes. Each node houses its copy of a ledger that tracks every piece of data's location and transfer. The data is updated and verified with transactions written and added, at regular intervals, to the blockchain. Nodes then receive rewards in the form of digital assets for being validators. Blockchain technology eliminates several risks that come with data being held centrally by storing data across its peer-to-peer network.
Blockchain technology can be integrated into multiple use cases and industries. The primary use case of blockchains today is as a distributed ledger for digital assets. Digital assets or cryptocurrencies, like Bitcoin and Ethereum utilize blockchain technology to record their transactions. In addition to the cryptocurrency use case, several efforts and industry organizations are working to employ different types of blockchains in supply chain management, Fintech, and other enterprise-level use cases.
Currently, there are four main types of blockchain networks: public blockchains, private blockchains, consortium blockchains, and hybrid blockchains. A public blockchain has no access restrictions. Anyone with an Internet connection can send transactions or become a validator. A private blockchain is permissioned, meaning users cannot join it unless invited by the network administrators. A hybrid blockchain has a combination of centralized and decentralized features. A consortium blockchain is semi-private and has a controlled user group but works across different organizations.