A common notion is that Bitcoin, a popular cryptocurrency, is blockchain and vice versa. The reality is that cryptocurrency is just one of the many different types of blockchain technology. But what is blockchain? A blockchain is a digital record that holds data and is uneditable once data is written into it. Through complex encryption, blockchains have the reputation of being some of the most secure ways to store such data.
To understand a blockchain, let’s first explore what the “block” in the blockchain is. A standard block will contain some data, a hash, and the hash of the previous block.
Data: Refers to anything that needs to be stored inside the block. In the case of bitcoin, contains the information about the sender and receiver, along with the amount being transferred.
Hash: This is a unique fingerprint-like piece of information that each block has. If data within a block is changed, then so is the hash of the block.
Hash of the previous block: Each block contains the hash of the block that came before it, which gives the blockchain the chain-like property. If the hash of a block is changed, then all blocks that come after it will be invalid.
What makes the entire blockchain secure is the fact that it is distributed and is also a public record. This is because of the peer-to-peer network that blockchain exists on. When someone joins this network, they get a copy of the entire blockchain. That means if a new block is created then it is sent to everyone who has the blockchain. If this block is not corrupt, then it can be successfully added through consensus, or the approval of everyone on the blockchain.