Blockchain
Contents
Blockchain
Blockchain is a decentralized and distributed digital ledger technology that records data in a secure, transparent, and tamper-resistant manner. It consists of a growing list of records, called blocks, that are linked together using cryptographic techniques. Each block contains a batch of verified transactions, a timestamp, and a reference to the previous block, forming a continuous chain of blocks.
Blockchain is the foundational technology behind cryptocurrencies such as Bitcoin, Ethereum, and many other decentralized systems.
Key Concepts
- Decentralization – No central authority controls the blockchain; it is maintained by a network of participants (nodes).
- Immutability – Once data is recorded in a block and added to the chain, it cannot be altered without altering all subsequent blocks and gaining consensus.
- Transparency – All transactions are visible to participants in the network (in public blockchains).
- Consensus Mechanisms – Used to validate and agree on the contents of the blockchain, commonly:
* Proof of Work (PoW) * Proof of Stake (PoS) * Delegated Proof of Stake (DPoS), and others.
How It Works
1. A user initiates a transaction. 2. The transaction is broadcast to the network. 3. Network participants (nodes) validate the transaction using a consensus algorithm. 4. Once verified, the transaction is grouped with others into a block. 5. The block is cryptographically linked to the previous block and added to the chain. 6. The updated blockchain is propagated across the network.
Structure of a Block
Each block typically includes:
- **Header:**
* Hash of the previous block * Timestamp * Nonce (in PoW systems)
- **Body:**
* List of validated transactions
Applications
Beyond cryptocurrency, blockchain technology is used in:
- Finance: Secure, transparent record-keeping (e.g., smart contracts, stablecoins)
- Supply chain: Tracking goods and verifying authenticity
- Healthcare: Managing medical records securely
- Voting systems: Enhancing transparency and auditability
- Digital identity: Verifying personal credentials and preventing fraud
- NFTs (Non-Fungible Tokens): Unique digital assets on blockchains like Ethereum
Advantages
- Improved transparency and trust
- Reduced need for intermediaries
- Enhanced security through cryptographic principles
- Immutable audit trails
- Fault tolerance in decentralized networks
Disadvantages
- Energy-intensive (especially PoW-based blockchains)
- Scalability challenges with transaction throughput
- Regulatory uncertainty
- Data privacy concerns in public blockchains
- Complex governance and upgrade paths
Types of Blockchains
- Public blockchain – Open to anyone (e.g., Bitcoin, Ethereum)
- Private blockchain – Controlled by a single organization
- Consortium blockchain – Governed by a group of organizations
- Hybrid blockchain – Combines elements of public and private systems
