One of the best examples of blockchain usage is its implementation with a cryptocurrency known as Bitcoin. Bitcoin needs a collection of computers in order for it to store its own blockchain.
This blockchain is essentially a specific type of database that in essence, stores every bitcoin transaction that has ever been made. These computers, however, unlike the case with traditional databases, are not stored under one roof. Each of them, or a smaller group of them, is operated by a different individual or a group of individuals.
To get a clearer understanding of how all of this works, let’s look at companies. Many companies, possibly ones that are more successful, can have a database or data center that is made from 1000 to 10000 computers. These computers are responsible for storing all of the client account information.
Now, in order to have these computers in use, the company also has to have a warehouse where all of the computers are stored under one roof. The company as a result has full control of each of the computers and all of the information within them, after all, they are their computers.
Bitcoin consists of thousands of computers, however, in the case of its blockchain, each and every one of the computers are in a different geographical location and they are all operated by different, separate individuals or groups of people that have never met each other and in most cases never will. These are the computers that make up the bitcoin network, and they are known as nodes.
This is how bitcoin’s blockchain Is implemented in a decentralized way. Keep in mind that private and centralized blockchains exist, and these are the ones where the computers that make up the network are owned and operated by a single entity.
Within a blockchain, each of the nodes has a full record of the data that has been stored on the blockchain since its creation. In the case of bitcoin, the data is the entire history of all of the bitcoin transactions that have ever been made. If one node has an error in its data, it can use the thousands of other nodes as a reference point to correct the data within it.
This way, not a single note within the network has the ability to alter the information that is held within it. Due to this, the history of transactions in each of the blocks that make up the bitcoin blockchain are irreversible.
If a person or a group of people attempted to tamper with bitcoin’s record of transactions, all of the other nodes could cross-reference each other and pinpoint the node that has the incorrect information.
This is the system that can establish an exact and transparent order through which each and every event has occurred within the blockchain. It is possible for a blockchain to hold many types of information, such as legal contracts, a company’s product inventory or even state identifications.
Let’s discuss the transparency and security of the Blockchain.