Blockchain is the building block and underlying technology for cryptocurrency and other digital properties. Blockchain technology allows for the secure transactions and decentralization of these digital currencies and properties, as every transaction is recorded into a ledger or database that is publicized. How does this technology work? Let’s begin with the basics.
The Components of a Blockchain
- The Record- all recorded information about a digital transaction
- The Block- a collection of records
- The Chain- All the blocks linked together
So let’s say you have 100 cryptocurrency coins. You can either keep those coins in your cryptocurrency wallet, or you can sell them for a monetary amount, based upon what those coins are worth (usually a supply and demand based number).
If you sell five of those 100 coins, for say, $250, that trade will be listed in a record with all of it’s associated details, including a cryptographic signature unique to that transaction, as well as a timestamp.
This record and all of its transaction details will be sent throughout the computer network associated with that specific cryptocurrency. The network will then cross-reference each copy of the database to ensure that transaction’s validity.
Once the network has proved validity, miners of the cryptocurrency add it to a block. Every block has an associated code called a hash that is completely unique on one side, and half of the previous block’s is on the other side, which allows those related blocks to link together forming the blockchain. These blocks are placed permanently, in chronological order.
Now that the chain is formed, your transaction is complete and you have sold your five cryptocurrency coins in exchange for $250.
The reach and potential of blockchain technology are difficult to estimate, but the ways in which these developments have the capacity to impact sales, marketing and business as a whole are innumerable. What do you wish you knew more about in the blockchain ecosystem?
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