Blockchain is a decentralized and distributed digital ledger technology that records transactions across many computers in a secure and transparent manner. Each record, or "block," contains a list of transactions and is linked to the previous block, forming a chain. This structure makes blockchain inherently resistant to tampering and fraud.
Here’s how it works:
Decentralization: Unlike traditional databases controlled by a central authority, blockchain is decentralized, meaning no single entity controls the network. Instead, a distributed network of nodes (computers) verifies transactions.
Transparency: Every participant in the network has access to the same copy of the blockchain, making transactions transparent and easily verifiable by anyone involved.
Security: Blockchain uses cryptography to secure transactions. Each block is linked to the previous one using a cryptographic hash, making it nearly impossible to alter the data of a previous block without changing all subsequent blocks, which requires overwhelming computational power.
Immutability: Once a transaction is added to the blockchain, it cannot be changed or deleted. This ensures the integrity of the data, making blockchain useful for applications requiring a trustworthy, permanent record.
Consensus Mechanism: Blockchain relies on consensus algorithms like Proof of Work (PoW) or Proof of Stake (PoS) to validate transactions and add them to the ledger, ensuring that all participants agree on the state of the blockchain.