What is blockchain? A simple explanation

Explanation

Imagine you have a digital notebook that you share with many other people. But this particular notebook has some amazing features:

1. UnchangeableOnce something has been entered, it can no longer be changed or deleted.
2. Transparent: Everyone can see what is written in the notebook.
3. DecentralizedNo single person controls the notebook. Instead, everyone has a copy.

This is basically a blockchain!

What does "decentralized" mean?

The term "decentralized" is a key concept of blockchain technology:

• No central authorityUnlike traditional systems (such as banks), there is no single entity that controls everything.
• Distributed controlInstead, control is distributed among many participants in the network.
• Copies for allEach participant has a complete copy of the blockchain.
• Joint decisions: Changes are made by consensus of the participants, not by a central authority.

Decentralization makes the system more resistant to failures and manipulation, as there is no single point of attack.

How does it work?

1. Blocks of informationInstead of having individual pages, our notebook has "blocks". Each block contains a list of transactions or information.
2. ConcatenationEach new block is connected to the previous one, like links in a chain. Hence the name "blockchain".
3. CryptographyEach block has a unique code (a "hash") that links it to the previous block. This makes it practically impossible to falsify the information.
4. Consensus: Before a new block is added, most participants must agree that it is correct.

Why is blockchain important?

1. Security: The concatenation and cryptography make it extremely difficult to manipulate data.
2. TransparencyAll transactions are visible to everyone, which creates trust.
3. EfficiencySince no middleman is required, transactions can be processed faster and more cost-effectively.
4. VersatilityOriginally developed for Bitcoin, blockchain is now used in many areas - from supply chains to digital identities.

Types of blockchain

1. Public blockchainAnyone can participate and view the data (e.g. Bitcoin).
2. Private blockchainOnly selected participants have access (often used in companies).

Blockchain technology is revolutionizing the way we store and exchange information. It offers a secure, transparent and efficient method for transactions (Crypto tokens and cryptocurrencies) in an increasingly digitalized world.