Beginner guide: what is the blockchain?

The blockchain is the system cryptocurrencies use for keeping track of every transaction. It’s a chain of blocks that links data together and is visible to everyone involved. Because the network can view every transaction past and present, a blockchain is a ledger for every transaction ever made on the chain.

How are blocks added to the blockchain? If you were to mine the newest Bitcoin, for example, your block would be tentatively added to the top of the dataset of all Bitcoin. And everyone else in the network would be able to see your transaction (along with all previous transactions ever made on that blockchain), check your new block’s backlog against their own chain and confirm or deny your new block. If your block is verified, it’s added to the highest spot on the blockchain and you are awarded what you really came here for — coins!

Why use a blockchain?

Decentralized blockchains, which are used by cryptocurrencies, have a lot of benefits. They are:

• Transparent: Everyone involved can view every transaction ever made.

• Secure: By verifying each block, it’s nearly impossible for anyone to hack.

• Anonymous: No one ever has to know who owns a cryptocurrency wallet (*cough* Satoshi Nakamoto *cough*).

• Accessible: Anyone can access cryptocurrencies as long as they have an internet connection.

• And more ... Seriously, there are major benefits for using blockchains outside of cryptocurrencies, and across industries.

Explain it to me in 15 seconds ...

The blockchain is a system of storing pieces of data in blocks, where each piece is linked to the pieces before it through a chain, which serves as the public ledger of all transactions.

And if it’s still not clicking, check out the image on the left for a simple way to visualize the idea of the blockchain.

One last blockchain fun fact … There are a ton of industries that blockchain could disrupt next. Banking, voting, and even the food industry are on the list of industries using or considering using blockchain technology to drastically improve their services.

Right now, IBM is using blockchain tech to track food along its supply chain from growers to grocers, meaning they’d be able to track a contaminated head of lettuce (looking at you, Romaine) from the farm where it grew to the store that sold it. And maybe eventually to the person who purchased it. Seriously, so cool.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.