The backbone behind cryptocurrency is a technology known as blockchain. In simple terms, a blockchain can be described as a secure, transparent, and decentralized ledger.
Imagine if an individual would like to send money to another person. On the blockchain, this transaction is combined with other transactions in the span of ten minutes into a data structure known as a block. This block is then sent out many individuals on the blockchain network, known as nodes, or miners.
Once the block has been sent to the nodes, the miners solve complex cryptographic puzzles (known as hashing or proof of work) to ensure that the transaction has met the security requirements of the network. Once the block has been validated, it is added to the chain of previously approved blocks, hence the name blockchain.
The value of blockchain is threefold: security, transparency, and the ability to append. In terms of security, it is impossible to break into a single block without breaking into all of the blocks that came before it, on every node of the network, rendering it virtually impossible to hack given the amount of computational power required for such a feat.
In terms of transparency, because the ledger is shared amongst all the nodes in the network, all individuals can see what’s going on and ensure that there is no funny business being conducted.
Finally, a blockchain ledger only allows one to append, not change or delete, again ensuring proper security measures.
