What is Blockchain?
At the heart of decentralized finance, the blockchain technology brought by Bitcoin is a type of distributed ledger where transactions are recorded with an immutable cryptographic signature called a hash. The decentralized database managed by multiple participants is known as Distributed Ledger Technology.
All transactions taking place in the network can be followed by users, and security and transparency are ensured thanks to the consensus-based control provided within the network. Again, thanks to this consensus-based control, transactions are carried out faster and intervention of third parties is prevented.
How does a blockchain work?
Blockchain is a distributed database shared between nodes of a computer network and information is stored in digital form within this network. Each block in a blockchain contains a series of transactions, and each time a new transaction occurs, a record of that transaction is added to the ledger of everyone on the network.
Transactions are recorded with an unalterable and unique cryptographic signature called “hash” as we said at the beginning. Thanks to this signature, any change in the block is checked by comparing it with the records of other users in the network, and in case of conflict, malicious attack attempts are immediately blocked.
The main feature that distinguishes blockchains from other databases is how data is structured. While standard databases usually store their data in tables or lists, a blockchain aggregates information into blocks that hold datasets. Each block has a certain storage capacity (block height).
When this capacity is full, the block is closed and connected to the previous block, forming a data chain. All new data following this block is compiled into another newly created block, which will be added to the chain again after it gets full.
When this data structure is implemented in a decentralized structure, it creates an inherently irreversible timeline. The blocks are placed on the chain with an unalterable timestamp indicating the exact moment they were added and become part of this timeline.
Thanks to the security, transparency and speed it provides, blockchain technology has now become an integral part of our lives. It cannot be denied that blockchain technology is the gateway to the world of the future, with which every field from health to education, from trade to defense industry is rapidly adapting.