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Blockchain for dummies.

Blockchain for Dummies: Things to Understand About the Blockchain

The chances are that in today’s status quo, you’ve heard of the term blockchain. Well affiliated with it or not, you may understand that blockchain is associated with cryptocurrency or virtual currency. You are likely less familiar with what types of blockchains exist or how they work. You aren’t alone on this front.

Blockchain is growing in popularity, and as more tech continues to use it to protect the integrity of their data, the advancements rise, as does the awareness of how this software works. Let’s get a better understanding of what blockchain is, in simple terms, to better understand crypto purchasing and trading and other items on the internet. 

What Is Blockchain?

Let’s dive right in—what is blockchain anyway? In simple terms, it’s a list of records. Each individual record is called a block, hence blockchain—a chain of these recorded blocks. Cryptography links the blocks together so various users can access them. 

Each block is further identified with a timestamp that helps place it correctly. This eliminates any confusion about where data goes or what order it should be placed. This timestamp is added through a cryptographic hash from the previous block. 

Blockchain is important because the blocks themselves cannot be altered once published. As new transactions take place, new blocks are added to the algorithms of the chain. Previous blocks cannot be edited, meaning records of who owned each piece of crypto are readily available. Users can go back and look at these databases for years to come. 

The records are pure and unbiased; they simply say what took place and when, offering top-of-the-notch information integrity and acting as a digital signature. 

Who Manages Blockchain?

Now that you’ve gotten the hang of what blockchain is and how it works, you may wonder who manages it. Who keeps track of all this data? Do third parties manage it? Who’s keeping up with it all? 

Blockchains are managed by a peer network, which means users can all add essential things like data or read blocks at any given time. 

There is no owner of the information. With public access at the ready for a public blockchain, tasks are split equally among users. This helps keep things neutral, avoids mistakes, and keeps the workload from being put too heavily on a few members. 

Blockchain has been praised for its design features and data security for these reasons and more. It has been an inspiration for additional tech and software. More and more items are being tracked by blockchains, which is a testament to its success. 

What Components Make Up Blockchain?

Next, let’s take a look at what’s inside of a blockchain and the important factors that make it work. These main features make up a blockchain through a series of stacked layers:

  • Infrastructure or hardware
  • Networking: verification, node discovery, etc.
  • Consensus 
  • Data
  • Application or smart contracts, when applicable

This digital ledger combines the above components to bring important pieces of data together. This includes aspects like who owns a digital file when the ownership was exchanged, transaction fees or value, and more. 

This is where it gets slightly more complicated. If you’re interested or have more than a basic understanding of this software, we encourage you to dive deep and learn all there is to know. 

How Is Blockchain So Secure?

Because the blocks are stacked, you cannot edit one without changing all of the later blocks as well. 

The inventors of blockchain were looking for a form of technology wherein the data could not be adjusted once it was made public. This helps keep data safe and encourages trust among members. With no ability to alter information or cause fraud, everyone agrees that the input data is correct. There are no arguments or second-guessing what the private blockchain has to say. It’s the final word. 

What’s more, blockchain can bring people together. Because the work is done by groups coming together—and there’s no chance of doing it wrong—users work together to create a common goal. 

Instead of being hosted on a central computer or server, blockchain is hosted by many computers at once. Nodes from many locations work together to create a decentralized hosting platform. This means many computers work together, even in small amounts, to meet this common goal. 

Overall, it’s a safer, more secure way to host so the blockchain can’t be moved or hacked by a participant. It’s also another way that many can work together toward this common goal. 

How Long Does It Take To Make a Block?

The length of time it takes to create a block varies between each currency or tradeable item. In most cases, the time it takes to create a block is between 5 seconds and 10 minutes. For instance, Bitcoin takes longer to complete, at around 10 minutes per individual block. 

Meanwhile, Ethereum blocks are made in about 15 seconds. This simply means the currency can be traded much faster. As soon as the blocks are completed, the data is verifiable, and you can check for things like timestamps, ownership, and more. 

Various factors contribute to the length of time it takes to make each block. Some users keep this in mind when performing quick trades or needing a fast turnaround time with their transactions. It’s something to think about for future trading, too. This is true whether you choose to create your own blocks or stay on the front end and stick to cyber trading instead. 

Blockchain, Decentralization, and Why It Matters

As we mentioned earlier, a blockchain doesn’t store its information in one location. Similarly, a blockchain isn’t supervised by any one individual, group, or corporation. Instead, that information is dispersed across a wide network of computers, servers, and supervisors. 

This process is called decentralization, and it’s one of the most attractive aspects of blockchain technology. By having a decentralized server, blockchain is more secure and less corruptible than other digital ledgers.

Being held on servers that more people can access makes a piece of software seem vulnerable. However, the software is safer because no one can edit the blocks. When held privately, an owner could attempt to hack into blocks without others realizing it, or a single user could access too many data fields. Decentralization keeps the blockchain safer, more secure, and more accurate. 

Chains can still be locked, so users need a private key to get in. This can prevent public access while keeping the chain off of private servers. 

Conclusion

There is much to know about blockchain, and the more you understand, the more successfully you can make your online trades, from digital items and NFTs to cryptocurrency itself. 

Blockchain is a way to track crypto data in a way that’s easily storable, accessible, and unchangeable. That way, you can follow each individual piece of crypto from its originating day to the status quo. Users work together to create and manage the blockchain through a peer-to-peer platform. 

What’s more, each type of crypto takes a different amount of time to recreate. Users will keep this timeline in mind when performing fast-paced trades and more.

Dive in or refer to the above when needed to step up your crypto game. Learn as you go for a more informed way to spend money online. 

The more you understand blockchain and how it works, the better you can trade crypto, purchase digital items, or simply understand how the markets work. Even a basic understanding can be an ideal starting place for business pros. 

Stay tuned for future newsletters to learn more about this growing software trend and tech advancements in this area. 

Sources:

Blockchain Definition: What You Need to Know | Investopedia

What Is Blockchain? | Forbes Advisor 

What Is Blockchain? How the Technology Transforms Daily Life | Bloomberg 

What is Decentralization in Blockchain? | Blockchain Council