How does blockchain work?
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A blockchain distributed ledger contains records held in “blocks”. When a transaction is logged, it is either validated or rejected by different nodes (members in the network). After receiving verification, a cryptographically-protected block gets added to the chain in a linear, chronological order.
New blocks are linked to the older blocks, and the chain is continually updated, so every ledger is the same. This gives each node the ability to prove who owns what at any given time. The decentralised and transparent nature of blockchain makes it highly secure and tamperproof. Any slight change in one ledger causes a discrepancy in the entire network. For example, to break into a distributed ledger with 5,000 computers would require you to hack all 5,000 computers at the same time, changing the same piece of information.
Because blockchain is non-refutable, secure, unbreakable and transparent, it also ensures trust between parties. Previous solutions to this problem have required a third party or intermediary, which usually costs money.
How is bitcoin connected to blockchain?
One of the first and most well-known uses of blockchain technology is bitcoin, which is a self-regulated, peer-to-peer digital currency. Blockchain is the technology which enables bitcoin users to transfer currency directly to each other without any intermediaries.
Bitcoin has received a significant amount of negative attention over the last few years for its association with drugs and other illegal activities. While bitcoin’s future remains unknown, blockchain, the underlying technology that bitcoin uses, is here to stay.