Are you a newbie in the crypto/blockchain world, or just trying to understand what it’s all about? Don’t stress – we have the basics explained!
Start with a quick blockchain definition below:
Blockchain technology first appeared almost ten years ago, as a way to provide and support Bitcoin. Despite the fact that this was its original purpose, this technology has developed numerous new use cases, and has touched nearly every major industry.
Blockchain promises a new way of exchanging information, making transactions, and preserving data. All of this is done in a decentralized way, which means that no single governing body would have control over it. That way, data is prevented from manipulation and tampering, while the power over transactions and money is taken away from financial institutions, and given to the community.
What is Blockchain?
Simply put — blockchain is a digital recording of transaction history. However, even this is not the best way to describe it, since it has numerous other features that differentiate it from a digital ledger in a traditional sense. It is managed and distributed across P2P networks that include numerous computing devices. Data regarding transactions is transparent and available to all of the network’s participants. Also, transactions are recorded on the blockchain upon validation via consensus mechanisms, which eliminate tampering and provide the truth.
We have already mentioned decentralization, but it is important to understand that this is one of the core principles that this technology is based upon. However, as time went by, many have started to doubt that true and complete decentralization can ever be achieved. That is — without sacrifices in some areas, such as privacy, scalability, performance, or security.
This is an important thing to note for everyone looking to approach the blockchain technology. It is also where the difference between public and private blockchain lies. These two types of blockchain are categorized as permissionless and permissioned, and understanding the difference between them is important for understanding different tradeoffs that need to be considered when developing a blockchain.
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