Once you start getting used to what bitcoins are and how to handle them, there comes an even more complex phenomenon called the blockchain of bitcoins. And let it be informed that even though a lot of people play a part in adding up in the blockchain, there are only a few ones who know how it works and even fewer ones who can explain it to others (us being in the latter). So this is where you finally get your questions regarding blockchains and bitcoins answered.
What Does Blockchain Mean?
To speak in simpler terms, blockchain is an online ledger of the exchange of cryptocurrency that cannot be forged or tampered with by anyone. To systematically understand more about blockchain you need to understand a few other terms.
The blockchain contains information for more bitcoin profit, the kind of information you can expect in a database, stored digitally in the computing system. This type of information is typically recorded in a table format but since the purpose here is to deal with a large amount of information, a mere table won’t be enough. Databases are designed to store a huge amount of information that can be accessed or formatted by any user of the database situated anywhere in the world with no trouble. To operate these large databases, the organization requires powerful computer systems with stable and strong servers that allow it to store and run databases.
The database houses this information collectively in the form of groups and stores it. This information is then called ‘blocks’. Each block has a limit to store a certain amount of information and when that limit is reached, it creates another block to keep recording the information. As more and more blocks are created, a blockchain is formed. Every new set of information is continuously stored by the addition of blocks in the chain. As the name already suggests, every bit of information in the block is tied by a chain to the next block.
After every ten minutes, the blockchain is designed to automatically update itself and add another block to it without the interference or assistance of any external force. Once the ledger has updated itself no one can tamper or forge any information in it. Every ledger is updated at the same time on every network and computer in any part of the world. Adding more entries to the ledger in the block is always open.
This means that once a transaction has taken place and recorded in the ledger it becomes impossible to tamper with or create false transaction entrees. Before a transaction is recorded in the block it needs to be approved by the nodes. Nodes are computers that check the transaction before crediting it to become a part of the block. The node examines every transaction before it can be approved by the majority for it to be considered valid because a forged transaction may have been made in the system. Then the node passes this information onto the block which then completes in making a blockchain.
ALSO READ: BITCOIN TRANSACTION FEES
What Do You Require in a Blockchain
For a transaction to become a part of the blockchain, users require two significant things. The first is the wallet and the second is a signature private key.
- Wallet: Every user who wants to participate in the blockchain needs to have their wallet. A wallet is a long string that consists of numbers and alphabets that are distinguished for every individual. For example, “4agh858pipe85”. This statement will appear in every blockchain where the transaction has occurred. This number of the wallet will only indicate that a transaction has taken place, it won’t however show by who or to whom. This wallet number is a public key visible to everyone.
- Digital Signature Key: Unlike the public key of the wallet, this signature key needs to remain private at all times. It doesn’t include alphabets, just a random collection of numbers that of course kept secret by every user. For any transaction to take place, the user needs to provide the digital signature key. Once both public and private keys are granted to the system it allows the transaction. And then the nodes check the validity of the transaction and accept it as a part of the information in the blockchain. After this, no changes can be made to the blocks.
ALSO READ: BITCOIN AND SOME OF ITS USES
That is pretty much the fundamental concept of blockchain technology explained above. Blockchain is a very secure and distributed database that allows person-to-person networking bitcoin transactions.