What Is A Blockchain? – A Brief Introduction

Filed Under: Random
Introduction To Blockchains What Is A Blockchain

Blockchains are making a dent in how we think about the internet.  They are also shaking up the way we do business. In this article, we’ll learn:

  • the basics of blockchain
  • how a blockchain is formed
  • and how it works

We’ll also understand the concept of cryptocurrency. Let’s get started!

Also read: 5 Blockchain Hackathons You Should Consider Participating in 2021

What Is A Blockchain?

A blockchain is a decentralized database that you can access from any computer on a network. The blockchain continues to grow as its supporting nodes add new blocks to the chain.

But what is included in these blocks? Why are nodes continuously adding blocks to the chain?

Nodes or miners on the blockchain keep a track of every single transaction that occurs on the blockchain. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Think of it as a bank statement – it keeps track of every single dollar that is credited and debited to your bank.

This ensures that you don’t double-spend the same dollar.

Similarly, blocks on a blockchain ensure that people are not able to double-spend their cryptocurrency after a transaction is complete. The benefit of blockchain technology is that there’s no single entity keeping track of this.

But instead, a group of hundreds of thousands of computers keeps track of all the transactions independently. So even if one of the computers from the network goes down, there are thousands of other backups.

How Are Blockchains Formed?

A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks.

After a block has been added by any of the nodes on the network, it is immutable. Even if a hacker modifies one of the entries, there are thousands of other nodes which have the backup of the entire ledger since inception.

So, to successfully hack a blockchain, hackers need to modify the transactions across all the nodes that are mining on that chain. And in the case of Bitcoin, a new block is added every 6-10 minutes. Hackers have that much time to hack all the hundreds of thousands of nodes and modify the transaction. This is why it is said that blockchains are virtually unhackable.

How Do Blockchains Work?

Blockchain Explorer
Blockchain Explorer

Blockchains are best recognized for their crucial role in cryptocurrency networks, such as Bitcoin, for maintaining a secure and decentralized record of transactions. Bitcoin’s blockchain, for example, contains a record of every single Bitcoin transaction that has ever taken place.

Each time a new transaction occurs on the network, it is added as a “block” to the end of the blockchain.  This block verifies and records the transaction, then sends a confirmation back to the respective parties.

The transaction is now complete! And the best part is – that because the blockchain is decentralized and distributed across the network, anyone can access it to view the transaction history.

The network of computers that maintain the blockchain is constantly verifying and timestamping new transactions as they occur.

These transactions are bundled up into blocks, and as each block is “completed” it is added to the end of the blockchain.

This forms a continuously growing list of all transactions that have ever taken place, from the genesis block (the first block in the chain) to the most recently completed block.

What Is Cryptocurrency?

Coinmarketcap Cryptocurrencies
Coinmarketcap Cryptocurrencies

A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, control the creation of additional units, and verify the transfer of assets.

Cryptocurrencies are virtual currencies without a central authority keeping track of those transactions. Bitcoin, the first cryptocurrency, was launched in 2009.

Since then, numerous other cryptocurrencies have been created. These are often called altcoins, as a contraction of “Alternative Coins.”

Cryptocurrencies use the blockchain’s decentralized ledger that records transactions in a secure, tamper-proof way. Blockchain technology is also being used to develop new applications beyond cryptocurrency, such as smart contracts, which are self-executing contracts encoded in digital form.

While Bitcoin remains the most well-known cryptocurrency and boasts the largest market capitalization, there are many other cryptocurrencies available. Let’s take a look at bitcoin along with multiple other altcoins here:

  • Bitcoin (BTC): Bitcoin is the first decentralized cryptocurrency that was created in 2009. Its supply is capped at 21 million BTC. Since its inception, the price of a single bitcoin has gone from less than $0.50 to over $69000! 
  • Ethereum (ETH): Ethereum is a decentralized platform that runs smart contracts. These are applications that run exactly as programmed without any possibility of fraud or third-party interference. This blockchain was created by Vitalik Buterin, a cryptocurrency researcher and programmer. ETH went live on July 30, 2015.
  • Ripple (XRP): Ripple is a real-time gross settlement system (RTGS), currency exchange, and remittance network. Founded by Chris Larsen and Jed McCaleb, Ripple has been making rounds in the crypto space for a while now. The native cryptocurrency of the Ripple network is XRP.
  • Bitcoin Cash (BCH): Bitcoin Cash is a fork of Bitcoin that was created in August 2017. The main difference between Bitcoin and Bitcoin Cash is the block size limit. Bitcoin has a 1 MB block size limit while Bitcoin Cash has an 8 MB block size limit. This allows for more transactions to be processed per second on the Bitcoin Cash network.
  • Litecoin (LTC): Litecoin is a peer-to-peer cryptocurrency that was created in October 2011 by Charlie Lee. Litecoin is similar to Bitcoin in many ways, but it has a faster block time and a larger number of coins that can be mined.
  • Dogecoin (DOGE): Dogecoin is a cryptocurrency that was created as a parody of Bitcoin in December 2013. It features the Shiba Inu dog from the “Doge” meme as its logo. Dogecoin has a fast block time and a large supply of coins.

Cryptocurrencies have seen tremendous growth in recent years. Bitcoin, the most well-known cryptocurrency, has seen its price increase from less than $1 in early 2010 to over $60,000 near the end of 2021. Ethereum, the second-largest cryptocurrency by market capitalization, has seen its price increase from around $10 in early 2017 to over $5,000 by the end of 2021.

Conclusion

That brings us to the end of our introduction to blockchains! Hope you have gained a brief understanding of blockchains to venture into this still-new world! One of the most interesting things is, if you get started while it’s still early, you can land some really good gigs in the business world with minimal competition. So go ahead and jump onboard the world of web3, blockchains, and cryptocurrencies today!

close
Generic selectors
Exact matches only
Search in title
Search in content