Blockchain can be thought of as a record of transaction history. Each block is sequentially meshed with the previous block and recorded in unchanged form on the peer-to-peer network. Cryptographic trust and assurance technology applies a unique identifier (or digital fingerprint) to each transaction.
This blockchain provides trust, accountability, transparency and security. All of this allows different types of companies and trading partners to share and access data. This phenomenon is called consensual third-party trust.
All participants keep an encrypted record of each transaction in a decentralized, highly scalable and flexible mechanism that cannot be revoked. Blockchain requires no additional costs or intermediaries. Having a decentralized, single source of trusted information reduces the cost of trusted commercial transactions between parties who may not fully trust each other. In the exclusive blockchain used by most businesses, participants are allowed into the network, with each party keeping an encrypted record of each transaction.
This unique technology offers many advantages to any company or group of companies that needs a secure, real-time record of transactions that can be shared. There is no single place where all of the information is stored, which ensures greater security and availability because there is no central point of vulnerability.
Here are some important definitions to help better understand blockchain, its underlying technology and examples of its use.
Decentralized trust.
The main reason companies prefer blockchain technology over other storage options is to ensure the integrity of data, independent of a centralized authority. This is called a decentralized trust, implemented at the expense of trusted data.
Blockchain blocks
The name “blockchain” comes from the fact that data is stored in blocks, each linked to the previous block, forming a chain-like structure (chain in English means chain). When working with blockchain technology, you can only add (attach) new blocks to an existing blockchain. Once a block is added to the blockchain, it cannot be deleted or changed.
Consensus Algorithms
Algorithms that define the rules that apply to the blockchain system. Once the parties involved in the system define the rules of the blockchain, consensus algorithms monitor compliance.
Blockchain Nodes
Blocks of data in a blockchain system are stored on nodes, storage units that keep the data synchronized and up-to-date. A node can quickly determine if a block has changed since it was added. When a new, full node joins the blockchain network, it uploads a copy of all the blocks currently on the network. Once the new node synchronizes with the other nodes and receives the current version of the blockchain, it can receive any new blocks in the same way as other nodes in the network.
There are two basic types of blockchain nodes.
Full nodes store a full copy of the blockchain.
Lightweight nodes store only the most recent blocks and can retrieve older blocks as needed.