Blockchain Foundations: Understanding the Core Technology

Blockchain Defined

Blockchain is a distributed, decentralized ledger technology that records transactions across many computers in a way that ensures security, transparency, and immutability.

Each record or 'block' is cryptographically linked to the previous one, forming a 'chain' that makes it virtually impossible to alter historical data without consensus from the network.

Key Characteristics:

• Distributed - Stored across multiple nodes rather than in a central location
• Immutable - Once data is recorded, it cannot be altered retroactively
• Transparent - All transactions are visible to network participants
• Secure - Uses advanced cryptography to protect data integrity

What is a Distributed Ledger?

A distributed ledger is a database that is consensually shared, replicated, and synchronized across multiple sites, institutions, or geographies.

Key Differences from Traditional Databases

• No Central Administrator: Unlike traditional databases controlled by a central administrator, distributed ledgers have no central data store or administration functionality
• Multiple Identical Copies: Each node (computer) in the network maintains an identical copy of the ledger
• Independent Updates: Nodes update independently based on consensus protocols
• No Third Party: This approach eliminates the need for a trusted third party to validate transactions