What is blockchain technology? As per my earlier article on what is crypto, if you’ve been studying up on crypto or if you’ve been thinking about buying some Bitcoin, Doge or what-not, you’ve undoubtedly run across the technology of blockchains.
What is a blockchain and how do blockchains work? Good question!
In this article, I’m going to cover a very basic non-technical explanation of blockchain technology.
But to start with, let me quickly answer the big question, why am I writing about crypto and blockchains?
While I can’t predict the market, part of my suggested strategy for making your money work is investing it and today, the crypto market provides both good short term trading possibilities as well as long term investment promises.
So what is a blockchain and what does it have to do with crypto?
In its most basic concept, a blockchain is simply a digital record of transactions.
The name “blockchain” comes from its structure, where each individual record called a “block” is linked together in a list or chain. Hence “blockchain”.
Blockchains are used to record transactions made with bitcoins and other cryptocurrencies. Blockchain technology can be used in any process that requires transactions so has many other applications.
Blockchain technology is considered extremely secure and reliable because once a record or “block” is created, it cannot be erased or edited. With each block being tied to a previous block, blockchains allow you to track the entire transactional process of any one given item or currency, from its inception to the present.
Let’s take a dollar bill in your wallet as an example. It would be completely impossible to track that dollar bill through every single transaction that it’s been a part of. However, with cryptocurrency and blockchain technology that IS possible.
Blockchains are decentralized, which essentially means there is no one single computer where all the records are stored and managed. This allows for complete security and integrity of the chain.
Prior to any transaction being processed and added to the blockchain, the transaction is validated by multiple computers on the internet. The network of computers works together to ensure each transaction is valid before adding it to the chain.
Once validated, blocks are added to a chain with a “cryptographic hash” that is generated from the previous block. Through this technology, the chain cannot be broken and every single record or “block” is permanent.
Penny Millions
Editor, Sleepy Money
(570) 903-8960
info@sleepymoney.com