Blockchain is the foundational technology that underpins the value proposition of the entire cryptocurrency ecosystem. It’s the engine that secures Bitcoin and the reason Ethereum smart contracts have value. As part of the first installment in an Education series about blockchain technology, this article aims to provide insight into what is a blockchain, why it provides value, and how it’s being used to reshape the way trust is managed in society.What is a Blockchain and How Does it Work A blockchain is highly secure, reliable, and decentralized network that allows people to store data, exchange value, and record transaction activity in a shared ledger that is not controlled by any central authority, but instead maintained by computers all around the world.
A ledger is a book or computer file that keeps track of economic activity. Ledgers can track individual account balances and/or the ongoing movement of money within entire economies. Today, most ledgers are handled by centralized entities such as a bank, which maintain and store ledgers on their own servers and in opaque databases.
A blockchain is a digital ledger that is stored and maintained by a decentralized network of computers. Each computer (node) in the network runs the same software and maintains, stores, and validates a copy of the ledger. Public blockchains use their own native asset known as cryptocurrency to financially incentivize nodes to communicate with one another and reach an agreement (consensus) on the validity of the ledger.
Users propose additions to the ledger by submitting transactions that transfer value from one account to another. User accounts are known as public keys (also called public address) and each public key has an associated private key. The public key is akin to an email address and the private key is similar to a password that the public key owner must enter (called a digital signature) to transfer funds stored on their addr...