What Is Blockchain?
Every time someone buys, sells or transfers any crypto the transaction is made possible only because of the Blockchain.
In short, it is because of Blockchains that crypto transactions are made possible.
Blockchain Explained In Simple Words
In simple terms the word ‘Blockchain’ is a portmanteau of the words ‘block’ and ‘chain.’ A block is a bunch of data or a collection of records representing a unique holder of the information.
A record with more than one block represents a ‘ledger’ of that record and correspondingly a chain of all these ledgers is known as the Blockchain.
The concept of Blockchain originated in the 1990s but it was implemented in 2009 only after an anonymous developer by the name of Satoshi Nakamoto presented the first cryptocurrency whitepaper of the famously known ‘Bitcoin.’
How does Blockchain Work?
A Blockchain works on a consensus mechanism, before diving in, it is important to realise how it functions. Every cryptocurrency transaction is associated with a certain Blockchain.
In the case of Bitcoin (BTC) it is the Bitcoin Blockchain, in the case of Ethereum (ETH) it is the Ethereum Blockchain, Solana (SOL) works on its own Solana Blockchain and so on.
Let’s understand the functioning of the Blockchain by taking the example of Bitcoin.
A Bitcoin Blockchain is used for transactions which means every transaction that involves bitcoin has an imprint on the Blockchain.
The first block in this chain is called the genesis block. Every block can hold a limited amount of data, once the block gets filled a new block needs to be added to the chain or in technical terms it needs to be “mined.”
On the Bitcoin Blockchain, a total of 1500 transactions can take place per block with a speed of 5 transactions per second (tps).
On the Ethereum blockchain, the speed can be between 12 to 15 transactions per second.
Every block works on a “hash (#)” mechanism.
In this mechanism, the input can be anything: an alphabet, a number or any symbol. No matter whatever the input the output is always a hash (#) value.
Bitcoin uses the SHA256 (Secure Hash Algorithm 256-bit) for cryptographic security. The number 256 indicates the number of zeros and ones which the algorithm can contain in the data.
Our computers are designed to read and interpret data in the binary (as ones and zeros) form. The SHA256 mechanism is designed to provide that ease to our computers.