21 July 2021 | Michael Moore | email@example.com
A blockchain is a concept that many people find difficult to understand possibly because it is new concept and quite different to the way people understand databases, financial transactions and records (a ledger is a balanced record of transactions performed). A blockchain is a decentralized ledger as distinct to the usual centralised ledger system banks and businesses use. It is, in fact a chain of blocks of data.
A good analogy of this is like a book with each block being a page. The pages run in sequence and are connected to each other by the end and beginning words on each page. This makes up the book. One can liken each page to being a block with each block connected to the previous block by the end and beginning code in the block making a chain of blocks. Now the decentralization part is the genius of this. Whereas a book once printed is not updated and, importantly, not added to subsequently, a block chain can be. It’s like adding a page to the end of the book and this page added simultaneously to all the copies of the book all at once at the same time. That is basically how block chain works. The book just gets longer and longer each time a page is added and that is a permanent record with everyone’s copy of the book growing at the same time. The amount of space used however is very small so there is no likelihood of it getting to big to handle.
The decentralization part is the fact that there are untold copies of the book spread around but the important thing is that each time a ‘page’ is added to the book it is updated immediately in every copy simultaneously anywhere. Why this is important we will look at later but firstly let’s look at the individual pages and their contents.
Each page, then, is a block. It contains a reference to the preceding block and a time stamp. It also contains data such as hashes. A hash, in computer terms, is like a number that represent something else. A hash is used to verify data and also reduce the amount of space used. Often data or a string of numbers or words takes up a lot of space and are duplicated many times. By using a hash one can reduce the space as well as verify the data. Hash is used a lot in a block. The time and date of each block is contained within the block.
This is important and is why blockchain works so well. As each transaction has been duplicated on millions of computers it is impossible to alter or change that time as if one did in that block it would be in conflict with the rest of the copies of that block and so would be rejected. This makes the blockchain secure and not subject to fraudulent interference. Records of Public keys are also contained within blocks. All blocks are of a certain size and when the capacity of the block is reached a new block is created with references to the previous block so adding to the chain with a block created about every ten minutes. Remember that every time a block is created it is simultaneously recorded on every copy of the blockchain.
Extract from the book, ‘The Secrets to Cryptocurrency.’ Available from https://authorservices.org/product/the-secrets-to-cryptocurrency/ for $9.95. Get your copy today!