If you have been into cryptocurrencies, banking or investing, you may have heard about the term “blockchain”. It is a technology that does the work of record-keeping and was first introduced with the bitcoin network. Bitcoin is the first and largest application of blockchain technology, but besides bitcoin, blockchain is used in all the cryptocurrencies and is widely used in the mainstream. Blockchain is a specific database that stores data or information in blocks, and that blocks are chained collectively, making a long chain of blocks. If you want to know more about bitcoin wallets so visit here now. Let’s see what is bitcoin’s blockchain and how does it work.
What is blockchain?
For some people, blockchain is complicated and therefore, bitcoin becomes difficult to understand, but in reality, the core concept of blockchain is simple. A blockchain is a particular type of database. In order to understand blockchain, let us first understand what a database is.
A database is a record of information that can be stored physically or electronically. Information in the database is basically in a table format, making it easier for everyone to understand the data and search or filter any specific information. When the database is small, it is generally stored on computers, and if the database is large, it is stored on servers comprised of powerful computers. These servers are sometimes built using thousands of computers to have the storage capacity and computational power that users require to access the database. So, what is the difference between a simple database and blockchain?
Storage Structure of Blockchain and Simple Database
One of the key differences between a blockchain and a simple database is the way in which the data or information is structured. Blockchain is the database in which the information is stored in groups, also referred to as blocks, and those blocks hold users’ information. Blocks of blockchain have storage capacities, and once they are filled, there are added into the long chain of filled blocks, and wholly this is known as the blockchain. All blocks have a unique number, and a new block is added with its previous block sequentially. Further information is added into new blocks, and it is attached to its previous block.
In a simple database, the data is stored in tables, whereas in blockchain, the data is stored in blocks that are stored together. This is why all blockchains are large databases, but not all databases can be categorized as blockchains.
In order to understand the decentralized nature of blockchain, we have to understand the concept of bitcoin and the implementation of blockchain by bitcoin. Bitcoin stored all its data in the blockchain. For bitcoin, blockchain is the only database that stores each bitcoin transaction that has been ever made in history. Bitcoin’s case is completely different from all other databases as the computers that work on the bitcoin network are not located or stored in one place. Each computer on the bitcoin network is located at different locations globally and is operated by unique individuals.
Bitcoin consists of hundreds or thousands of computers, but the unique thing is that each computer holds its bitcoin’s blockchain, or we can say every computer has a copy of the blockchain, and the updates are made in real-time on all computers at once. The computers that are involved in the bitcoin network are referred to as nodes.
Also, blockchain is used in a decentralized way as it isn’t operated or owned by any single authority and is independent of any entity. All the nodes in blockchain have a complete record of data stored on blockchain since the date on which the first transaction was made. Blockchain is a public ledger, and anyone can view the bitcoin transactions or the entire history of transactions. Also, if any node on the bitcoin network has an error in data, then that node can use all other nodes to correct and update itself. This is the way that blockchain follows, which makes it impossible for anyone to alter the information that is once recorded in the blockchain ledger. Because of this, bitcoin’s transactions are irreversible.
The Bottom Line
It is crucial to acquire complete knowledge about the working of bitcoin and its technology to understand how the transactions work.