TLDR: Blockchain, popularized by Bitcoin, is a secure, tamper-resistant digital ledger with applications beyond cryptocurrencies.
This article is a summary of a You Tube video “How does a blockchain work – Simply Explained” by Simply Explained
Key Takeaways:
- Blockchain Origin: Initially described in 1991 for timestamping digital documents to prevent tampering, like a notary.
- Popularization with Bitcoin: Adapted by Satoshi Nakamoto in 2009 for creating Bitcoin, making blockchain technology widely known.
- Structure: A blockchain is a chain of blocks containing data, the hash of the block, and the hash of the previous block.
- Data and Hashes: Each block stores data (like transaction details in Bitcoin) and a unique hash, comparable to a fingerprint.
- Immutability: Altering a block’s data changes its hash, making subsequent blocks in the chain invalid due to mismatched hashes.
- Security through Proof-of-Work: Introduces time and computational effort to add new blocks, deterring tampering and recalculating hashes for all blocks.
- Distributed Nature: Managed by a peer-to-peer network rather than a central authority, enhancing security and integrity.
- Consensus Mechanism: Network nodes verify new blocks, maintaining consensus on valid and invalid blocks, rejecting tampered ones.
- Tamper-Resistance: Altering a blockchain requires changing all subsequent blocks, redoing their proof-of-work, and controlling over 50% of the network.
- Evolving Applications: Beyond cryptocurrencies, used for smart contracts, medical records, digital notary, and more.
