Blockchain, the brainchild Satoshi Nakamoto and the only way to buy bitcoin, has been called the best thing since sliced bread in the tech world. But what is it and why does everyone like it so much? Let’s start by answer the popular question …
What’s the easiest way to explain blockchain technology? Blockchain is a digital record book of every transaction that’s made on its network. It updates in real time, is open for all the public to see, and cannot be hacked because it lives on a peer-to-peer network (remember LimeWire?)
What Are the Blocks in Blockchain?
Each block on a network is a record of a transaction you make, like buying a bitcoin. Once you make your purchase, it’s verified, stored on a block (or node, which is the technical term), and then given its own unique code called a hash. This helps you or others track down that particular transaction in the future since no two blocks are the same. Then this block gets to join all the other blocks in the blockchain.
The 3 Types of Blockchain
Now that you have the basic idea of what blockchain is, here are the three different types you may come across.
Public blockchains are just that, networks that anybody with internet access can see and use. You can even validate someone else’s transaction and have them on the block. Bitcoin is bought and sold on this type of blockchain.
Private blockchains are invite-only, meaning that you have to get permission from the network administrators. Companies who want to use this kind of tech but don’t want it open for the whole world to see tend to use this type of blockchain - think banks.
Consortium blockchains is a unique version of the private one. Instead of being run by one person, it’s owned by a group of companies who set the rules as to who can do what inside their blockchain - think banks and government.
Why All the Hype about Blockchain?
One of the biggest reasons why blockchain is starting to take off in the land of tech is how hack-proof these systems are. Because the information stored on these blocks aren’t housed in one centralized place, users take comfort in knowing that any computer hacker can’t break in and steal their sensitive information. How does that work? Each block has its own copy of the blockchain so there isn’t one updated version a hacker can corrupt to take down the whole system.
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