What is Blockchain?
If this technology is so complex, why call it “blockchain?” At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).
How Blockchain Works
When a block stores new data it is added to the blockchain, as its name suggests, consists of multiple blocks strung together. In order for a block to be added to the blockchain(BLC), however, four things must happen:
Is Blockchain Private?
Anyone can view the contents of the BLC, but users can also opt to connect their computers to the network as nodes. In doing so, their computer receives a copy of the BLC that is updated automatically whenever a new block is added, sort of like a Facebook News Feed that gives a live update whenever a new status is posted.
Each computer in the network has its own copy of the BLC, which means that there are thousands, or in the case of Bitcoin, millions of copies of the same BLC. Although each copy of the BLC is identical, spreading that information across a network of computers makes the information more difficult to manipulate. With BLC, there isn’t a single, definitive account of events that can be manipulated. Instead, a hacker would need to manipulate every copy of the BLC on the network. This is what is meant by BLC being a “distributed” ledger.
Looking over the Bitcoin BLC, however, you will notice that you do not have access to identifying information about the users making transactions. Although transactions on the BLC are not completely anonymous, personal information about users is limited to their digital signature or username.
This raises an important question: if you cannot know who is adding blocks to the BLC, how can you trust BLC or the network of computers upholding it?