Blockchains are a type of distributed ledger technology that allows multiple parties to maintain a shared and synchronized record of transactions. These transactions are grouped into blocks, which are then linked together in a chain, hence the name “blockchain.” The technology was first introduced in 2008 by an individual or group of individuals going by the pseudonym “Satoshi Nakamoto” as the underlying technology behind the first cryptocurrency, Bitcoin. Let’s take a closer look at the advantages and challenges of blockchains.

Technical basics of blockchains

Blockchains are built on a decentralized architecture, meaning that no single entity controls the network. Instead, it is maintained by a network of users or “nodes” that work together to validate and record transactions. Each node has a copy of the blockchain, and every time a new transaction is added, all nodes must agree that it is valid before it is included in the next block. This consensus mechanism is known as “proof-of-work” and is used to ensure the integrity and security of the blockchain.

Once a block is added to the blockchain, it cannot be altered or deleted. This immutability is achieved through the use of cryptographic techniques such as hashing, which ensures that once a block is added, it becomes a permanent part of the blockchain.