What is a blockchain?

A decentralized ledger

A good way to introduce the concept of blockchain is through an analogy with the ledger of a large company. The ledger is the record where all the income and expenses of an organization are recorded and organized. Every economic activity of a company should be reflected in one of the accounting entries in the ledger. Naturally, this is the most important book for any accounting, which is why there are various techniques and technologies to provide greater security and reliability to this type of record.

In this sense, there are "distributed ledgers" that lack a central administrator or server and are replicated and shared by different participants in a synchronous and consensus-driven manner. It is not difficult to understand why a distributed record in a network of participants is more robust and resilient than one that is located in a single point. However, the process of incorporating new information into this network-sustained record becomes more complex. Blockchain is one of the technological solutions in this direction.

The Blockchain

A blockchain is a unique and decentralized ledger, sustained by the participation of different computers. These computers verify the information in this ledger independently, using various computational procedures. In this way, the information on the network results in a large distributed and open consensus for all parties involved.

Each block in the chain contains a limited set of information (transactions) that, once completed, becomes unalterable. In this sense, operations performed on the blockchain are tamper-proof and irreversible.

The blockchain is open, allowing anyone to access the record it encompasses. Similarly, any computer that meets the minimum requirements can contribute its computing power to the network.

"While most technologies tend to automate peripheral workers, doing domestic tasks, blockchain automates the center. Instead of leaving the taxi driver without a job, blockchain leaves Uber without a job and allows taxi drivers to work directly with the customer." - Vitalik Buterin

Updated on: 15/06/2023