What is Blockchain – A Short Description on How it Works
Everything in the crypto world is possible and achievable thanks to the blockchain. But what exactly is this technology and how does it work?
What is Blockchain?
A blockchain is a collection of digital records, also known as blocks, which are linked with each other through cryptography. Every block contains a cryptographic hash linked to the prior block, including its timestamp and transaction information, that can be illustrated as a Merkle tree.
No external forces are able to make changes to the blockchain. A such, it is a decentralized entity. Essentially, it is a representation of financial democracy.
How does the Blockchain work?
Thanks to its design, the blockchain is an “open” ledger. This means that anyone can see previous transactions between different cryptocurrency wallets.
For that reason, many businesses are using blockchain technology to build their projects and add transparency.
How the blockchain works when it comes to PoS coins?
Bitcoin miners have to “mine” each block (collection of digital records) through a powerful computer (node).
These nodes compete against each other to validate a large number of transactions by solving mathematical puzzles of high complexity. Whoever manages to solve the final transaction of the block is receives a certain amount of Bitcoin (currently 12.5 BTC).
When a miner validates (mines) a block, it automatically stacks upon the previous block, creating what we know as a Blockchain