What Is a Blockchain? in the world of finances, every bank’s task is to record
the history of transactions and balances of all accounts in the accounting system.
where banks make transfers between themselves another institution watches over them and keeps their own transactional history and balances.
every operation is over washed by a central bank that belongs to an international site of central banks and organizations that keep Ledgers of central banks. in the world of cryptocurrency, it looks completely different.
Storing the balances of all accounts and transactional history is based on a global scale at site in which every participant stores exactly the same copy of database called blockchain.
How Does This System Work?
its’ foundation is the database that stores the records of account balances and all transactions that has happened in the system from its’ very beginning. blockchain is the first database in the history of the world that is immutable: nothing can be removed or modified inside of it. only fresh blocks with new transactions can be wrote in.
production of the new block is not an easy task it requires the commitment of time and computing power.
The person that is the first to find a very large number, called hash, block and promotes it to other members of the site in return receives newly generated units of a given cryptocurrency.
They will be written into the set of all other transactions in the freshly generated block. at first, the computing power of a desktop computer was enough to generate new blocks.
But with the increasing number of participants, the amount of power became higher and special devices were created.
Their only task is to search for the correct hash of another block. the increasing computing power also resulted in a radical escalation of the safety of the whole site and the data stored inside of it, lessening the risk of anyone’s interference in the blockchain structure.
every participant of the site watches
over the accuracy of all generated transactions, verifying their correctness and approving it.
Blockchain isn’t centrally controlled by any person or institution. control over it is in the hands of all participants of the site.
Thanks to a general consensus, that nobody wants to break, blockchain has properties like: borderless – gets round potential, geographical and economic borders. censorship resistance – nobody can turn it off, or make any changes according to their individual plan.
every participant is equally important. more important people or institutions that organize the system and actively monitor it simply do not exist. everyone can join the system. open – every element of the system is fully transparent to everyone. there is nothing to hide. Meanwhile – a high level of anonymity is preserved.