Blockchain works as a decentralized computer network, where cryptography and economic incentives for participants ensure that no one has to know or trust anyone else for the system to function properly. Each member in the network, or node, has a copy of the same data in the form of a distributed ledger.
5 features that make blockchain a unique technology:
One of the great innovations proposed by the blockchain is data immutability. After the validation of transactions and the creation of a new block, its content cannot be easily manipulated, replaced, or falsified. If one node’s ledger is altered or corrupted, its version of the transaction record will be rejected by the network, making the system robust to attacks.
Every blockchain has a consensus mechanism that allows users to coordinate in a distributed setting without the need for a central authority. Either by providing computational power or by locking coins, blockchain consensus mechanisms ensure that all agents in the system can agree on a single source of truth to confirm transactions, implement changes to the protocol, and make other governance decisions.
Smart contracts are programs stored on a blockchain. These run automatically when the conditions are met. They are typically used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss.
All transactions can be transparently viewed by either having a personal node or using blockchain explorers that allow anyone to see transactions occurring live. Each node has its own copy of the chain that gets updated as fresh blocks are confirmed and added.
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