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What is blockchain?

Blockchain is the underlying technology on which the majority of cryptocurrencies, including Bitcoin and Ethereum, are based.

The blockchain is a distributed ledger. It is similar to the ledger that banks hold to monitor all the digital transactions we make using fiat currency.

However, unlike the bank’s ledger, there is no central authority who controls it. Anyone in the network can see that a transaction has taken place. This provides the security, transparency and trust that has got so many excited about cryptocurrency.

Think of it more like a Google doc to which everyone has access. They can all see every change that has been and will be made and have a say on whether they should allow them to remain. The difference is that a blockchain uses a consensus algorithm to ensure that the correct changes are made and no one can hijack the process for their own ends. It also uses cryptography to ensure that once a change has been verified, it cannot be undone.

Is there an example?

The best example is blockchain’s first and still most famous application: Bitcoin.

The Bitcoin ledger is distributed across the entire network. Everyone in the network can see it and trust that what is on it is correct. That transaction is recorded in the Bitcoin blockchain ledger and sent across the whole Bitcoin network for everyone to see.

The updated ledger is copied hundreds of thousands of times, every single hour, across multiple computers to make sure that everyone is on the exact same page. They will then verify that the transaction has really taken place and there is nothing amiss. If at least 51%!c(MISSING)onfirm that it has taken place, it will be added permanently to the blockchain.

Because that blockchain has to be double and triple and quadruple checked by computers all around the world, you can actually set your own computer to become part of the network and help both verify transactions and also help mine Bitcoin.

People aren’t just using blockchain for cryptocurrency, though. You can theoretically store any data on a blockchain and companies across a variety of industries are using it for different tasks, such as keeping track of goods through the supply chain.

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