What is a blockchain
We start the second part of our JAVLIS learn campaign where we speak about the wonderful world of blockchain, cryptocurrencies and decentralized finance.
In this blog post, you can learn what a blockchain is, what features a blockchain has and how a blockchain is working to understand the technology and mechanisms behind cryptocurrencies, because cryptocurrencies make use of blockchain technology.
Let’s start with the question: what is a blockchain?
A blockchain is a decentralized database where encrypted blocks of digital asset data are stored and chained together, forming a single chronological source of truth.
As new data comes in, it is entered into a fresh block. Once the block is filled with data, it is chained onto the previous block, which makes the data chained together in chronological order.
Different types of information can be stored on a blockchain, but the most common use case so far has been as a ledger for transactions like in Bitcoin, the most famous cryptocurrency.
Let’s move on to the features of a blockchain. In general, we can speak of six features.
The first feature is immutability
A blockchain is a permanent and immutable network in which stored data cannot be changed retroactively.
The second feature is distribution
That means each participant in the network has a complete and equal copy of the database to ensure full transparency.
The third feature is decentralization
On a blockchain, no central authority makes decisions, which are always made by the entire network members.
Security is feature number four
All data on a blockchain is individually encrypted. Since there are no central decision-makers, no data can be added or deleted by individual entities.
Feature number five is consensus
Every blockchain has to make fast and unbiased decisions without the network participants having to trust each other. This is ensured by every blockchain’s consensus algorithm; this is like a predefined set of rules to find a decision on specific topics.
The last feature is unanimity
For a block of data to be added to the database, the majority of the participants in the network must agree. This mechanism guarantees that no single participant adds incorrect information to the database or deletes data.
With this knowledge, let’s move on to the next question: How does a blockchain or a transaction within a blockchain work in detail?
As soon as a new transaction is entered, this transaction is then transmitted to a network of peer-to-peer computers distributed across the world. This network of computers then solves quotations to confirm the validity of a transaction.
When transactions are confirmed they are clustered together into blocks. These blocks are then chained together creating a long history of all transactions that are permanent. With this step a transaction within a blockchain is completed.
As you can see, blockchain technology has many unique features. This makes it a very secure and transparent tool for finance applications. And that’s why we at JAVLIS have decided to use this technology for our platform.
