Data in blocks
The Bitcoin blockchain was created in 2008 by an individual or group of people known as Satoshi Nakamoto to decentralize control of money when centralized organizations have failed. The publication of Bitcoin’s white paper outlined a set of rules that defined a new type of distributed database: blockchain. The network was launched in 2009.
Blockchain refers to the data stored in blocks of information that are then linked together in a permanent chain. A block is a collection of Bitcoin transactions from a specific period onwards. Stacks of blocks are stored on top of each other, with each new block building on the previous ones. As a result, the blockchain is thus created.
Every time a new block is added it makes the previous ones unmodifiable this ensures that each block is more secure over time and is an example that Bitcoin technology is changing the way banking and financial transactions are made.
What makes blockchain technology unique is that every action is recorded and there is nothing left off the grid. Bitcoin’s blockchain is decentralized which means it is not stored on a master computer nor controlled by any company.
Bitcoin technology uses peer-to-peer (P2P) transactions making it possible to operate without a bank or third party to manage every financial transaction. Allowing electronic payments to be sent from one party to another without an intermediary.
Term peer to peer (P2P)
The term peer-to-peer means that the computers that form the part of the network are equal, that there are no special “nodes”, and that all nodes share the burden of providing services. Bitcoin consists of thousands of nodes that execute the protocol.
How does a blockchain work?
Bitcoin represents a digital, reliable form of money and at the same time a movement for the decentralization of financial services. Every transaction that takes place on the Bitcoin network requires the corresponding computing power. Hash strength is the processing used by the computer to execute and solve various algorithms. These algorithms are used to create new cryptocurrencies. This process is called mining.
A blockchain is a digital ledger of transactions distributed across the network, and this distributed database is managed by multiple participants using a technology called DLT.
A blockchain is a type of database, a collection of information stored electronically in a computer system. What is kept in databases is usually structured in tabular form to make it easier to search for and filter information. Databases are designed to be easily and quickly accessed, filtered, and edited by all users at any time.
The difference between a blockchain and a database lies in how the data is structured. A database structures data into tables, while a blockchain collects information in blocks that hold data sets. Each block has a specific storage capacity that connects to the previous block, forming a data chain.
When a block is filled it is unchanged and becomes part of a schedule so each block on the chain has an accurate timestamp when added to the blockchain.
So, the goal of blockchain is to allow the recording and distribution of digital payments, but not processing. This is why it differs from a database that has been added to the blockchain after it cannot be modified.