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Top Crypto Terms Deep Dive: Blockchain (Part 1)

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It seems as though blockchain is everywhere these days. Even outside of the tech industry, blockchain is on everyone’s mind – especially with all of the recent news about Bitcoin and the cryptocurrency market. But what is blockchain, exactly? What does it have to do with Bitcoin? Are Bitcoin and Ethereum different? And why does everyone talk about mining?

What Is Blockchain?

When you ask someone to define “blockchain”, chances are that they will say something similar to the following:

Blockchain is an immutable distributed ledger that is replicated across a network rather than on a central server.

While it’s the quickest definition, it doesn’t quite go far enough into explaining what blockchain is or does. Let’s break it down a little further.

Distributed Ledger

On its own, blockchain is just a data structure or a way to collect, organize, and store data. Other data structures include databases, spreadsheets, text files, and even simple lists. Of these, blockchain is most similar to a traditional database but, in blockchain’s case, there is software built on top of the database that adds new rows (blocks), validates that the new rows conform to a set of predetermined rules (mining), and then broadcasts those new rows to the network (the blockchain).

The process of creating a block of data, validating that data, and then pushing that validated block to the rest of the network, is how a blockchain is born and maintained.

Immutable

Now that we know how blockchain is put together on the basic level, what makes it immutable (unable to be changed)?

The most basic answer lies in the blocks themselves.

Bitsonblocks.net shared a great example that helps illustrate what a block is:

Think of blocks in a chain likes you would think of pages in a book. A page in a book is made up of two specific things:

  1. The text
  2. The navigational info like the page number and the chapter or book title

Block in a chain are made similar components:

  1. The text – usually data like transaction records
  2. The navigational info – information about the current block and what it contains as well as information about the previous block

Blocks aren’t organized chronologically likes pages are in a book, however. Blocks are organized according to a unique alphanumerical representation of the data that is stored in each block. These are often referred to as a block’s “fingerprint” or, more technically, its hash. Each block in a blockchain references the hash of the block before it. This is the key to blockchain’s immutability.

In order to change the data stored in a block, you’d have to then change the hash of that block because the hash is directly related to the data. When you consider that every block after the changed block was organized based on the original hash, any change to the hash will be easily seen down the entire chain – making it very easier to pinpoint where a change occurred.

Believe it or not, this is just the tip of the iceberg when it comes to blockchain. Over the next few weeks, we’ll look deeper into how blockchains are maintained and explain the key differences between the major blockchains.

Join our Mobilechain group on Telegram to learn even more about the blockchain community!

Posted by Dana Cohen

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