Blockchain technology is an entirely new way of documenting data on the internet. In fact, it’s sometimes referred to as The Internet 3.0.
The idea behind blockchain technology is that is can provide enhanced digital processing power while being a more secure way to handle internet transactions in the wake of mushrooming cybercrimes.
The information recorded on a blockchain can take on any form, whether it be denoting a transfer of money, ownership, a transaction, someone’s identity, an agreement between two parties, or even how much electricity a lightbulb has used. However, to do so requires a confirmation from several devices, such as computers, on the network.
Once a consensus is reached between these devices to store something on a blockchain, it is unquestionably there, it cannot be disputed, removed or altered, without the knowledge and permission of those who made that record, as well as the wider community.
Blocks on the blockchain are made up of digital pieces of information. Specifically, they have three parts:
- Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon (although Amazon does not work on a blockchain principle).
- Blocks store information about who is participating in transactions.
- Blocks store information that distinguishes them from other blocks. Even though the details of your new transaction would look nearly identical to an earlier purchase, each block has unique codes.
While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the blockchain can actually store up to 1MB of data. A single block could handle thousands of transactions.
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