Blockchain Meaning
Blockchain serves as a distributed and decentralized digital ledger, securely documenting transactions across a network of computers, creating an unalterable and transparent chain of blocks.
What is a Blockchain?
Blockchain is a revolutionary technology that serves as a decentralized and transparent ledger for recording transactions. It operates across a network of computers, where each transaction is grouped into a “block” and linked with previous transactions in chronological order, creating a chain of blocks. This design ensures transparency, security, and immutability, as once a block is added to the chain, altering its content becomes nearly impossible.
How Does Blockchain Work?
When someone initiates a transaction via a blockchain payment gateway or on any crypto exchange, it is sent out to a network of nodes — globally distributed computers.
After being validated, it is grouped with other transactions into a block. At this stage, a chain that systematically records the transaction history is being formed, thanks to each block containing a cryptographic link to the previous one. The decentralized nature, consensus mechanisms, and cryptographic security collectively create a tamper-resistant and trustworthy system.
Smart contracts, another integral aspect of blockchain, are self-executing contracts with predefined conditions. These contracts automatically execute agreed-upon actions when specific conditions are met, further enhancing the efficiency and trustworthiness of transactions on the blockchain.
Types of Blockchain
Understanding blockchain involves recognizing the 4 main types:
Public Blockchain
Public blockchains are accessible and unrestricted, enabling participation from anyone to contribute to consensus, validate transactions, and uphold the integrity of the blockchain. Bitcoin and Ethereum are good examples of public blockchains.
Private Blockchain
Private blockchains restrict participation to a specific group, offering controlled access for confidentiality. They are suitable for business applications where privacy is a priority.
Consortium Blockchain
Consortium blockchains are semi-decentralized, with a predetermined group of nodes responsible for validating transactions. This type provides a balance between the openness of public blockchains and the control of private blockchains.
Hybrid Blockchain
Hybrid blockchains integrate features from both public and private blockchains. They leverage the transparency of public networks and the control of private networks, offering flexibility in application.