Blockchain technology is a decentralized, distributed, and immutable digital ledger system. It is a type of database that enables transactions to be recorded securely, transparently, and auditable. Each block is cryptographically linked to the previous block, forming a chain.
Blockchain technology fundamentally operates through the combination of three main components: blocks, chain, and a distributed network.
Each "block" contains a set of transaction data. These blocks house information such as:
Blocks are chronologically linked to each other via cryptographic hashes. Every new block includes the hash of the block immediately preceding it. This linkage ensures the immutability of the blockchain: altering any data in a block also changes that block's hash, invalidating all subsequent blocks in the chain. Making such a change is extremely difficult, as it would require the consensus of the vast majority of the network.
The blockchain, instead of being held on a single central server or database, is simultaneously maintained across thousands of computers (nodes) in the network. Each node possesses a complete copy of the blockchain. When a new transaction occurs, it is broadcast to all nodes in the network and validated via a specific "consensus mechanism" (e.g., Proof of Work or Proof of Stake). Once validated, a new block is created and added to the chain, after which copies on all nodes are updated.
The security of the blockchain is ensured by robust cryptographic methods. Specifically, hash functions and digital signatures are employed. Hash functions transform data into a unique, fixed-size string, while digital signatures verify the authenticity and integrity of transactions.
The key features that distinguish blockchain from other database technologies are:
The blockchain is not controlled by a single authority or server. The network is managed by all participants, and decisions are made in a distributed manner. This ensures there is no single point of failure.
Data within a block, once added to the chain, is practically unchangeable or undeletable. This characteristic creates a permanent and reliable record of transactions.
All participants (nodes) in the network can view all transactions on the blockchain. This provides complete transparency and auditability, although user identities are typically concealed with pseudonymous addresses.
It provides high security through cryptographic methods and its distributed structure. For an attacker to alter data, they would need to control the majority of the network, which is extremely difficult.
Participants do not need to trust each other, as the system itself ensures security through algorithms and cryptography.
While blockchain technology is known for cryptocurrencies, its potential use cases are quite broad: