Blockchain is a technology that has sprung into popularity in the last decade alongside the rise of cryptocurrencies and other digital assets. Well-known examples include the Bitcoin Network and Ethereum.
A blockchain, as the name suggests, is a continuous list of blocks of information that live on a network of computers. New blocks are continuously added to the existing chain, and all the computers on the network participate in verifying the information contained in each new block. This verification process is known as the consensus mechanism, with the most well-known mechanisms being Proof of Work and Proof of Stake.
The key attribute of blockchains is that they are decentralised, meaning no one computer or actor can modify the record of events stored in the “chain.” This gives them strong security guarantees, allowing an immutable record to be maintained across the entire network. These systems are built not to rely on a single authority, and instead work by sharing responsibility across a large number of participants.
Blockchains are particularly useful to form the basis of digital money and decentralised financial applications, as they help create and maintain scarce virtual assets. This is in stark contrast to the typical understanding of digital data, where making copies of things is not only easy but one of the main benefits.
