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A blockchain is a sequence of blocks of transaction data chained together with cryptographic proofs called “hashes,” and where the data is distributed amongst computers called “nodes.” The result is a single ledger of transactions that can be used as the basis of cryptocurrencies or decentralized applications without a centralized coordinating party.
While most people associate blockchain with Bitcoin and its creator Satoshi Nakamoto, it is, in fact, an evolution of a technology described by Stuart Haber and W Scott Stornetta in 1991. In 2008 an anonymous figure called Satoshi Nakamoto released the Bitcoin white paper, establishing the model for the blockchain we know today and making it suitable for a public, decentralized network through built-in tokenized economic incentives.
A blockchain operates via a network of computers and uses cryptography to create a distributed ledger of tamper-proof transactions. Blockchain is used in various applications, including royalties tracking, cross-border payments, supply chain, or cryptocurrency.
One way of imagining a blockchain is as a single-column spreadsheet that everyone in the world has access to, including you. When data is added to an individual cell, a copy is also saved to your personal computer. Once all the nodes confirm a cell, they then all move on to the next.
In this way, the data within the spreadsheet is shared between multiple people at the same time. The important thing to understand is that in a blockchain, nobody can change the information already added as the hashes cryptographically prove that the data hasn’t been changed. This is what is referred to as “immutable.”
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